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Part 1 – Australian Resident

Last updated 11 June 2017

Use this part if you were an Australian resident for tax purposes during 2016–17.

What you need

You will need details of your JPDA income and any foreign tax paid from your PAYG payment summary – foreign employment for 2016–17, or a letter from your employer.

You need to know

You are taxed on your net assessable JPDA income at resident rates of tax with a foreign income tax offset allowed for the lesser of the:

  • Australian tax payable on your net assessable JPDA income
  • tax paid to Timor-Leste.

What you need to do

Use worksheets 1 and 2 to complete the following items in myTax:

  • Foreign employment income (on a payment summary)  
    • Net foreign employment income
    • Foreign tax paid
     
  • Foreign income tax offset, in 'Offsets' section.

Follow these steps to complete myTax.

Step 1

If you have a payment summary that includes JPDA income, complete worksheet 1. This shows you how to work out your net foreign employment income.

Step 2

If you have a payment summary that includes foreign tax paid, show it in myTax and complete worksheet 2. This shows you how to work out your foreign income tax offset for your net foreign employment income.

Step 3

Complete the remainder of your tax return.

Example 1 will help you fill in worksheets 1 and 2.

Example 1

Jose, a driller, lived in Darwin (zone A) when he was not at a drilling site. For 8 months of the income year he worked in the JPDA. Jose received a PAYG payment summary – individual non-business which showed $74,000 gross salary and wages and Australian PAYG tax withheld of $26,260. He received a separate PAYG payment summary – foreign employment that showed gross salary and wages of $96,000 relating to his period in the JPDA and that, in addition to the $12,152 Australian tax withheld, $17,280 tax had been withheld and paid to Timor-Leste. The amount paid to Timor-Leste was shown on the payment summary at the 'foreign tax paid' label.

Jose had work-related expenses of $700 of which $500 related to his work while in the JPDA. He had no other income or deductions. Jose's taxable income is therefore $169,300. Jose had no dependants. He had appropriate hospital cover for the whole year and was not liable to pay Medicare levy surcharge. He is entitled to a zone offset of $338 as he lived in Darwin for more than 183 days.

Worksheet 1 – Jose

Row

Calculation elements

Amount

a

Gross JPDA income included on PAYG payment summary – foreign employment.

This includes amounts shown at Foreign employment income (on a payment summary) in myTax:

  • Gross payments,
  • Lump sum A, and
  • Lump sum E.
 

$96,000

b

Total work-related expenses directly related to JPDA income

This includes amounts shown at the appropriate items in myTax:

  • Union or professional association fees – in Foreign employment income (on a payment summary)
  • Work-related car expenses
  • Work-related travel expenses
  • Work-related uniform, occupation specific or protective clothing, laundry and dry-cleaning expenses
  • Work-related self-education expenses
  • Other work-related expenses.
 

$500

c

Take row b away from row a. Jose enters the amount at c at 'Net foreign employment income' at Foreign employment income (on a payment summary) in myTax.

 

$95,500

Worksheet 2 – Jose

Row

Calculation elements

Amount

a

Taxable income as shown in myTax 

$169,300

b

Tax* on taxable income using our rates and calculators

$53,659

c

Total net foreign employment income (the amount at row c in worksheet 1).

$95,500

d

Take row c away from row a.

$73,800

e

Tax* on row d.

$17,008

f

Take row e away from row b.

$36,651

g

Total foreign tax paid as shown on all PAYG payment summary - foreign employment

$17,280

* This includes any Medicare levy and Medicare levy surcharge payable.

Jose's foreign income tax offset is:

  • if the amount at row g does not exceed $1,000, the amount at row g
  • if the amount at row f is greater than or equal to the amount at row g, the amount at row g
  • if the amount at row f is less than the amount at row g, the amount at row f.

If Jose's foreign income tax offset did not exceed $1,000, myTax would automatically complete the Foreign income tax offset. However because it does exceed $1,000 Jose includes his foreign income tax offset at Foreign income tax offset, in the 'Offsets' section. On Prepare return screen, alongside 'Offsets' section he clicks 'Add/Edit'. Under 'Foreign income tax offsets' he enters the offset amount (g).

Jose will receive a refund of $2,371.
This is $53,659 (tax and Medicare levy payable)
minus $338 (zone tax offset)
minus $17,280 (foreign income tax offset)
minus $38,412 ($26,260 + $12,152 Australian tax withheld).

If Jose had worked in Australia for the full year and had the same income and deductions, he would have completed the tax return differently and had a different PAYG Australian tax withheld amount, but his refund would have been the same.

Calculations are based on monthly payments.

End of example

Worksheet 1: Net foreign employment income

If you have more than one PAYG payment summary – foreign employment showing JPDA income, you will need to work out a net foreign employment income amount for each payment summary.

Worksheet 1

Row

Calculation elements

Amount

a

Gross JPDA income included on your PAYG payment summary – foreign employment

This includes amounts shown at Foreign employment income (on a payment summary) in myTax:

  • Gross payments,
  • Lump sum A, and
  • Lump sum E.
 

$           

b

Total work-related expenses directly related to your JPDA income

This includes amounts shown at the appropriate items in myTax:

  • Union or professional association fees – in Foreign employment income (on a payment summary)
  • Work-related car expenses
  • Work-related travel expenses
  • Work-related uniform, occupation specific or protective clothing, laundry and dry-cleaning expenses
  • Work-related self-education expenses
  • Other work-related expenses.

.

$

c

Take row b away from row a. Enter the amount at row c at 'Net foreign employment income' at Foreign employment income (on a payment summary) in myTax.

$

Did you have work-related expenses?

If you had work-related expenses relating to your JPDA income (that is, you showed an amount at row b in worksheet 1), then you should complete the relevant deductions for work-related expenses in myTax.

These items deal with deductions for work-related expenses as follows:

  • Union or professional association fees in Foreign employment income (on a payment summary)
  • Work-related car expenses
  • Work-related travel expenses
  • Work-related uniform, occupation specific or protective clothing, laundry and dry-cleaning expenses
  • Work-related self-education expenses
  • Other work-related expenses.

Completing worksheet 2

You cannot use worksheet 2 if you have:

  • exempt foreign employment income
  • other foreign income
  • unapplied foreign losses from prior years
  • other foreign income tax offsets available.

If any of the above apply, you may need to read the Guide to foreign income tax offset rules 2017.

Worksheet 2: Foreign income tax offset calculation

If you have more than one PAYG payment summary – foreign employment showing foreign tax paid, use this worksheet to work out a consolidated foreign income tax offset amount.

Worksheet 2

Row

Calculation elements

Amount

a

Your taxable income as shown in myTax 

$           

b

Tax* on your taxable income using our rates and calculators

$

c

Your total net foreign employment income (the amount at row c in worksheet 1).

$

d

Take row c away from row a.

$

e

Tax* on row d

$

f

Take row e away from row b.

$

g

Total foreign tax paid as shown on all of your PAYG payment summary – foreign employment.

$

* This includes any Medicare levy and Medicare levy surcharge payable.

Your foreign income tax offset is:

  • if the amount at row g does not exceed $1,000, the amount at row g
  • if the amount at row f is greater than or equal to the amount at row g, the amount at row g
  • if the amount at row f is less than the amount at row g, the amount at row f.

If your foreign income tax offset does not exceed $1,000, myTax will automatically complete the Foreign income tax offset.

If your foreign income tax offset exceeds $1,000, myTax will ask you to work out the maximum tax offset you can claim. On Prepare return screen, alongside 'Offsets' section click 'Add/Edit'. Under 'Foreign income tax offsets' enter the offset amount (either row f or row g as advised above).

If the Residency status you selected is 'D - Changed residence during the year', go to Part 2 – Resident of Timor-Leste. Otherwise, go to Check that you have...

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