Foreign Income Declaration ( EPF , Deductions ) & Amending Previous Multiple Years Returns

 Author: TaxingQuestions(Initiate)Initiate

3 Feb 2024

Hi There,

I've been trying to find answers to a few things which are not quite clear for me between how Foreign income needs to be declared in AUS for specific items and credits in India -

I think I have an understanding now and realise I need to go back and amend multiple years tax returns -Please could you help with validating the below ?

I very much appreciate it!

I live in Australia and file taxes here but I also have foreign income in India e.g. by way of interest in savings account. For good measure I also file taxes back in India and have been declaring any taxable income in India as my foreign income here in Australia when filing taxes.

In Australia, I file the returns myself not via an agent. ( In India it is via an agent )

I will be coming into some capital gains made on foreign investments ( equities / mutual funds ) - and in trying to determine how exactly they would need to be calculated and declared in my upcoming tax returns in Australia, I checked how I had declared my previous years foreign income and I think may have made an error in previous year's returns

My understanding has been that I include the taxable income that is specified in my Indian Tax returns . This excludes income that Indian tax laws considers either exempt or allowable deductions under section 80c and others

However, in reviewing this and trying to reverify recently through research on these forums , I believe that may not have been accurate ?

Income that was exempt as taxable income in India ( and thus something I did not declare as foreign income in Aus taxes )

• reduction of taxable income due to deduction of premium paid on Life Insurance policies ( e.g. if my taxable income is 100000 INR, and I pay 20K Life Insurance Policies , then my taxable income in India becomes 80000 INR ( minus 20 K ) under section 80c as allowable per law
• Indian Employer Super Annuation ( Gratuity ) interest was exempt under Indian Tax Law
• A couple of years ago I became naturalised in Australia and my employment on the Indian Payroll of my company was terminated and transferred to Australia - in this - there was a lump sump payment of Employee Provident Fund - this payout was exempt from Indian tax laws and hence I did not declare it
  • In relation to the above, my collected Superannuation was transferred to a National Pension Scheme ( i.e. not credited to my account but put in an equivalent super scheme )
• 
  

Based on my research and reading the forums, I now believe this is incorrect? i.e. I should have

1. not counted the deductions in Indian Income Tax filing to reducing my taxable income
2. declared the earnings on my Employee Provident Fund on credit to my account as the amount credit minus my personal contributions
   1. Question: Scenario. I came to Aus in 2014. Payout in 2021. In 2014 the amount of EPF was 500000 and my contribution till this time was 250000. Then at 2021, the payout was 700000 and my contribution between 2014 and 2021 was only 100000. Then how would this need to be declared i.e. either a or b ( note - there was no payout from this EPF till 2021
      1. Option a ) the accrued income minus self contribution between 2014 and 2021 i.e. (700000 - 500000 -10000) = 100000 OR
      2. Option b ) The accured income minus self contribution since inception even before 2014 i.e. 700000 - 250000-10000 = 350000

I am happy to amend my tax returns - thankfully the amount is not huge but I still want to correct all records - unfortunately they go back a few years - I will have to check if ATO website allows amendment online for those far back - will this cause an issue ?

I had already amended them before to include interest on FDs which I had forgot to include - which I now do.

( and yes, going forward I am going to go to an agent to not get in this headache :( - thought I could learn enough to do it )

Note:

Foreign income I have been declaring already

• Savings on interest
• Interest on FDs
• Dividends
• Interest on EPF

Thanks a lot!!

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