If you are an Australian resident with overseas assets you need to take any capital gains or capital losses you make on those assets into consideration when doing your tax return. Generally speaking, anyone who earns over the tax free threshold during the course of a financial year, 1 July – 30 June, is required to submit an individual tax return to the Australian Tax Office.
Additionally, if you have interests in a foreign company, a foreign trust or a foreign life insurance policy, you may have to include income you receive from these interests in your tax return.
If you receive foreign income that is taxable in Australia and you paid (or are taken to have paid) foreign tax for which you were personally liable on that income, you may be entitled to an Australian foreign income tax offset.
How can I claim a foreign income tax offset?
You can claim a tax offset for the foreign tax you have paid on employment income or capital gains that are included in your assessable income. You do this in your Australian tax return. In some circumstances, the offset is subject to a limit.
To be entitled to a foreign income tax offset:
• you must have actually paid an amount of foreign income tax
• the income or gain on which you paid foreign income tax must be included in your assessable income for Australian income tax purposes.
You may also be entitled to an Australian foreign income tax offset if you received income, or a profit or gain, from a source in an area covered by an international tax-sharing treaty (for example, the Joint Petroleum Development Area), to the extent that the income or profit or gain is taxed in Australia.
When considering investment properties and foreign investments it is important that you seek professional advice, not only in regards to the financial and tax implications, but also any legal obligations. Here at The Quinn Group our experienced team of Accountants, Financial Planners and Lawyers can assist you in all your overseas investment and income queries. For more information on negative gearing losses and deductible expenses or any other queries please submit an online enquiry, or for any other information call us on 1300 QUINNS (784 667) or on +61 2 9223 9166.