How do I calculate my FITO when my only income has been foreign?

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(Newbie)Newbie

22 July 2024

Hello Everyone,

I have been a part resident for the 2023/2024 tax year. I am a permanent resident. My only income for the year has been maternity pay from the UK as I don't start work here until later this year. I have declared this as my foreign income. I have paid tax on this income in the UK and the amount of tax paid is over $1000 so I need to calculate my Foreign Income Tax Offset (FITO). I do not have any deductions to add. My only income is the maternity pay from the UK and I have nothing further to add from Australia. I do not understand the calculation used for FITO - Is it simply the total amount of tax I have already paid? Can anyone explain this in simple terms?! Thankyou!

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ATO Certified Response

AshleyATO

(Tax Time Tech Expert)Tax Time Tech Expert

ATO Certified Response

25 July 2024

Hi @scaox

If you paid more than $1000, you first need to work out your FITO limit. The FITO that can be claimed is limited to the lesser of the foreign income tax paid and the FITO limit. Basically it's a formula of working out - The tax payable on ALL income including Australian and foreign sourced - minus - tax payable on the income if the foreign income source is not included = which will equate to the FITO limit.

You need to work out the tax payable on your combined (foreign & Australian ) income, then the tax payable on your foreign income, then deduct the tax payable on your foreign income from the tax payable on your combined income.

Calculate your FITO or offset limit | Australian Taxation Office (ato.gov.au) contains the steps to work out your FITO including examples.