Announcements
We’re in read-only mode while we do some scheduled maintenance to bring you a bigger, better and brighter online community.
You can still search the site to find answers or take a look at our current top 10 questions.

ATO Community

Re: Foreign Rental Income - Reporting Period

Newbie

Views 1017

Replies 5

Hey ATO,

 

I have a rental income from a property overseas, and I am paying income tax there.

I earned rental income from March 2019 to March 2020, still earning, but I paid my tax for the mentioned period on March 2020.

 

For this tax return what should I report as my income and the tax paid?

- Report July 2019 to July 2020, and tax I paid in March 2020? OR

- Do some kind of apportionment? And If so, what would be the logic for that?

 

Really appreciate if you can give me a solution,

 

Thanks

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Initiate

Replies 4

You would need to apportion it to the correct financial year in Australia.

 

Unlike Australia, most countries do not have an income year ending on 30 June. You may need to report your foreign income and associated tax offsets in multiple tax returns in Australia.

You will need to determine which tax years the income amounts align to and apportion them accordingly.

https://www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/foreign-income/#thi...

 

I guess for a rental property you would be easily able to assess when income was coming in (assuming it was rented out the whole time) and work out how much of the tax you paid applies to the Australian financial year.

5 REPLIES 5

Most helpful response

Initiate

Replies 4

You would need to apportion it to the correct financial year in Australia.

 

Unlike Australia, most countries do not have an income year ending on 30 June. You may need to report your foreign income and associated tax offsets in multiple tax returns in Australia.

You will need to determine which tax years the income amounts align to and apportion them accordingly.

https://www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/foreign-income/#thi...

 

I guess for a rental property you would be easily able to assess when income was coming in (assuming it was rented out the whole time) and work out how much of the tax you paid applies to the Australian financial year.

Newbie

Replies 3

Thanks for the reply.

 

There isn't much problem with aportioning the rent, but for tax I have a question? If I apportion my the tax I paid, I won't be able to report tax for the months April, May and June, because I haven't tax for those months yet. I will pay that on March 2021.

 

What can I do in this case?

Former Community Support

Replies 2

Hi @bsar

 

@VolcanoMan has provided some good information and a useful link.

 

Australian residents with rental property in a foreign country should claim any deductions in that country. The rental income will also be included in your tax return for that overseas country.

 

Also include the gross foreign rental income in your Australian tax return.You can then also claim deductions according to Australian tax law in your Australian tax return, i.e. as if your property was located in Australia. If tax was paid in a foreign country, a foreign income tax offset can be claimed in your Australian tax return.

 

Refer to Guide to foreign income tax offset rules 2020. This page has an explanation and a lot of useful links to help you calculate your tax offset. The page also includes this information:

 

  • Differences between the Australian and foreign tax systems may lead to you paying foreign income tax in a different income year from that in which the income or gain is included in your income for Australian income tax purposes. You might have paid the foreign tax in an earlier or later income year. However, the offset can only be claimed after the foreign tax is paid.
  • If you paid foreign income tax after the year in which the related income or gains have been included in your Australian tax return, you can claim the offset by requesting an amended assessment for that year. You have up to four years to request an amendment to your assessment from the date you paid the foreign income tax. You should also request an amendment if there is an increase or reduction in the amount of foreign income tax you paid that counts towards the offset.

 

I hope this assists you

 

Tracey

Newbie

Replies 1

Hi,

Can the foreign rental expenses be claimed as deductions on the Australian returns even if they have been claimed on the overseas tax returns already?

ATO Community Support

Replies 0

Hello @raj_paras

 

I provided a response to this question in your other post with some useful links: Foreign Rent Loss

 

In general, the deductions that can be claimed follow the same rules as normal deductions, except debt deductions, therefore you may be able to claim some expenses depending on your circumstances.

 

You may also want to consider seeking advice from a registered tax professional.

 

Have a great day Smiley Happy