Edited version of private advice

Authorisation Number: 1052373919470

Date of advice: 19 March 2025

Ruling

Subject: Basis of returning foreign income

Question 1

Will the Commissioner allow you to return your Country X foreign sourced income on a Country X income year basis on your Australian income tax return?

Answer 1

Yes.

For income tax purposes, an individual taxpayer will usually be required to include amounts of foreign income derived during the Australian income year on their Australian income tax return.

Where an individual's foreign source accounts are prepared on a basis other than an income year ending on 30 June, it is recognised that there can be difficulties in dissecting income for the purposes of returning income on a strict Australian income year basis.

In line with the principles discussed in Taxation Ruling IT 2498 Income Tax: foreign tax credit system: currency translation of foreign income: trading stock and depreciable plant: basis of returning foreign income: capital gains/losses, the Commissioner accepts that you havedemonstrated difficulties in obtaining information in relation to your foreign sourced income within a suitable timeframe to include on your Australian tax return by your lodgement due date.

Therefore, you will be allowed to return the foreign sourced income on a Country X year basis on your Australian tax return.

If the difficulties which have warranted you being allowed to return foreign sourced income on the foreign income year basis cease to exist, you will be required to return the foreign sourced income on the Australian year of income basis.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

XX July 20XX

Relevant facts and circumstances

Person A and Person B (You) are Australian residents for tax purposes.

You prepare and lodge your own Australian income tax returns.

You receive a foreign source Government Pension from Country X.

The Country X income year does not align with the Australian income year.

You need to have access to your Country X income tax returns before You can prepare your Australian income tax returns. This is so that You can obtain the correct income share of Country X income.

You have difficulty lodging your Australian tax returns in the required timeframe because:

•                information for the period from X until X of the relevant Australian income year is not available for your foreign source income from Country X until the following Australian income year.

•                In Country X, the tiered tax rate and the amount of tax reduction may change from income year to income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5