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Re: Target Foreign income and Part-Year Tax Resident

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Initiate

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Hi Community

 

Part-year tax resident left Autralia permanently in the middle of financial year. Does his income received overseas after he left Australia is Target Foreign Income? It's not taxable in Australia because was earned as non-resident but should it be reported as target foreign income in relevant year tax return? In reporting period person received Family Assistance payments from Centerlink while been Australian resident, and once he left Australia his payments been stopped. The question is should overseas income be reported as target foreign income for the period when he stopped to be Australian resident for tax purposes in the relevant financial year?

 

Thanks

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ATO Certified

Community Support

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Hi @Irina,

 

Please complete Determination of residency status - leaving Australia.

 

On completion you'll be provided a result of residency status for taxation purposes and specific information regarding what you need to report.

 

If you can't make a determination after completing the Determination of residency status - leaving Australia and applying it to IT4 Target foreign income please contact us.

 

I hope this helps,

JasonT

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Devotee

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If he is no longer an Australian tax resident and no longer residing in Australia, the foreign earnings should not be included.

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@TaxedoMaskthank you for your reply. But I am still not sure that this is answer on my question. I understand that this is not included as taxable in Income Questions section of Tax Return. But there is Income Tests Questions section which requires to provide Target Foreign Income. Please see below:

"You must complete all questions in this section of your tax return.

We use income tests to work out whether you:

  • can claim certain tax offsets and the amount you are entitled to receive
  • can receive some government benefits or concessions
  • are entitled to a rebate for your private health insurance
  • must pay tax
  • must pay Medicare levy surcharge
  • have a Higher Education Loan Program, Student Financial Supplement Scheme, Student Start-up Loan, ABSTUDY Student Start-up Loan or Trade Support Loan repayment liability.

We may also pass this information to other government agencies, such as Services Australia, to ensure you are receiving your correct entitlement to government benefits. It will also be used to correctly determine any child support payments."

 

"Target foreign income is:

  • any income earned, derived or received from sources outside Australia
  • a periodical payment by way of gifts or allowances from a source outside Australia
  • a periodical benefit by way of gifts or allowances from a source outside Australia

provided that the amount has neither been included in your taxable income, nor received in the form of a fringe benefit."

 

I assume this is section where amount need to be reported because person received Centerlink payments (as well as child support). Will much appreciate your feedback. Thanks

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ATO Certified

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Hi @Irina,

 

Please complete Determination of residency status - leaving Australia.

 

On completion you'll be provided a result of residency status for taxation purposes and specific information regarding what you need to report.

 

If you can't make a determination after completing the Determination of residency status - leaving Australia and applying it to IT4 Target foreign income please contact us.

 

I hope this helps,

JasonT

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Initiate

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@RachaelB  may I ask your opinion, please? I saw some your answers in relevant topics (regarding spouse foreign resident income). Thanks

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Community Manager

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Hi @Irina,

 

This is a great question. I see there has been some confusion in providing an answer.

 

Check out this information on the the Family assistance website.

 

I would contact them to check if it needs to be declared and if it does it would be at the target foreign income question.

 

I will also do some further research on the matter and let you know.

 

KylieS

 

 

 

 

 

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@KylieATO yes, I tried to do my own research and found some examples of target foreign income but on social security guide which include newly arrived migrants who received foreign income in the reference tax year that is not subject to tax in Australia; on family assistance guide examples include newly arrived migrants who expect to receive foreign income in the current year that is not subject to tax in Australia. So I was in doubts if opposite to these examples person left Australia, should person's income be treated in the same way or not... Thanks! very interesting to know how it is treated by Centerlink. 

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Moderator

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Hi @Irina,

 

We've heard back from our technical team on this one.

 

No, Target Foreign Income does not need to be reported for amounts received after the taxpayer left Australia and ceased to be a resident and has stopped receiving benefits. While this information can ordinarily be relevant for thresholds for income tax, and  benefits being received while living in Australia, some calculations include part year pro-rata.

 

Effectively, the relevant thresholds for income tax and benefit payments will ordinarily take into account part year circumstances. The fact  that in this case the taxpayer became a non-resident and the benefits ceased to be received while not in Australia is significant. Which means that target income for this period is not required to be reported.

 

Thanks, NateH