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Re: Foreign income allowable deductions for HELP overseas levy

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Newbie

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Hi

 

Some background: I have a HELP debt and I have lived overseas for several years so I am not a resident for tax purposes.

 

I am trying to work out my HELP overseas levy using the calculator and the Non-resident foreign income field is a bit unclear. When I hover over the question mark it says: "Net foreign income is total foreign income, minus allowable deductions."

 

What exactly constitutes "allowable deductions"? Are they any deductions made on my foreign tax return (and are there any exceptions to this)? Or is it something else?

 

Cheers

Sean

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Hi @sean-26072020,

 

Thanks for your question.

 

I'm going to make an assumption that you are planning to use the overseas-assessed method for reporting your worldwide income (as you mentioned your foreign tax return). If that's the case, then the net foreign income would be the taxable income amount on your foreign tax return (gross income - deductions allowed by the foreign jurisdiction.)

 

Alternatively, with the comprehensive tax-based assessment method, you would need to work out your income and deductions as if you were doing an Australian income tax return, so the allowable deductions would be those you would be entitled to if you were working in Australia.

 

The simple self-assessment method only requires you to have your gross income and then select your occupation to apply the standard deduction.

 

If you are trying to work this out in the study and training loans repayment calculator, the first two methods I covered can provide an estimate, but if you're using the simple self-assessment method, the calculator can only give you an estimate without the standard deduction. When you lodge your worldwide income, you can get an estimate before you actually submit the information.

 

Hope this helps.

RochL

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Replies 2

Hi @sean-26072020,

 

Thanks for your question.

 

I'm going to make an assumption that you are planning to use the overseas-assessed method for reporting your worldwide income (as you mentioned your foreign tax return). If that's the case, then the net foreign income would be the taxable income amount on your foreign tax return (gross income - deductions allowed by the foreign jurisdiction.)

 

Alternatively, with the comprehensive tax-based assessment method, you would need to work out your income and deductions as if you were doing an Australian income tax return, so the allowable deductions would be those you would be entitled to if you were working in Australia.

 

The simple self-assessment method only requires you to have your gross income and then select your occupation to apply the standard deduction.

 

If you are trying to work this out in the study and training loans repayment calculator, the first two methods I covered can provide an estimate, but if you're using the simple self-assessment method, the calculator can only give you an estimate without the standard deduction. When you lodge your worldwide income, you can get an estimate before you actually submit the information.

 

Hope this helps.

RochL

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Newbie

Replies 1

Hi RochL

 

Thanks for the detailed reply. It is now much less confusing for me.

 

If I understand correctly...

  • Overseas-assessed: the tax period in Germany is Jan-Dec so I I cannot use this method.
  • Comprehensive tax-based assessment: it seems like this is the best method if I have a number of deductions to claim (self-education, home office, computer for work).
  • Simple self-assessment: I cant seem to find what the "standard deduction" is for my job so I have no way to compare it with the comprehensive method. But I would imagine that this method is only better for people who dont have many deductions?

Cheers

Sean

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Community Support

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Hi @sean-26072020,

 

To clarify - if your German tax return is Jan-Dec, it overlaps the period of the Australian tax year, so you can use it.

 

Australian year 1/7/19-30/6/20

German year 1/1/19 - 31/12/19

German year 1/1/20 - 31/12/20

Both of the German tax years overlap the Australian tax year, so either could be used. However, if you aren't using a tax agent, you need to lodge by 31/10/20, so the second one wouldn't be practical. The only thing that would stop you using the first German assessment, would be if you had already used it to lodge your worldwide income in 2019. You can't use the same overseas return twice.

 

With simple self-assessment, when you go into ATO online to report your worldwide income, you would put in your gross income and then select your occupation. The standard deduction for that occupation is automatically applied to the income.

 

Regards

RochL