Foreign income: residency, records and tax paid overseas
This guide covers residency distinctions, foreign income and capital gains records, currency conversion and conditional foreign tax offsets.
On this page
- Residency
- Tax residency and temporary-resident treatment are separate questionsATO foreign and temporary residents
- Foreign tax
- An overseas tax payment does not automatically establish an equal Australian offsetATO FITO eligibility guidance
- Attribution
- © Australian Taxation Office for the Commonwealth of Australia; original explanation, no endorsementATO copyright notice
Start with the applicable residency treatment
The ATO distinguishes foreign residents from people meeting temporary-resident requirements. Tax residency and temporary-resident treatment are separate questions; a visa label alone does not decide the tax result. ATO foreign and temporary residents (opens in a new tab).
Temporary-resident rules can exempt most foreign income, while overseas employment or services can differ depending on facts and treaties. This guide does not establish residency or exemption eligibility. ATO foreign and temporary residents (opens in a new tab).
Identify the income and any attribution
The ATO worldwide-income guidance includes overseas work, investment returns and capital gains. ATO worldwide income guidance (opens in a new tab).
Interests in foreign entities or trusts may give rise to attributed income that has not been distributed. Receiving no cash does not by itself settle the Australian reporting question. ATO worldwide income guidance (opens in a new tab).
Keep disposal and residency-change records
Selling an overseas asset can have Australian capital-gains consequences. Becoming or ceasing to be an Australian tax resident can also affect asset treatment; the ATO highlights valuation records and possible exemptions. ATO worldwide income guidance (opens in a new tab).
This overview supplies no cost-base calculation, capital-loss allocation, discount or residency-change election.
Match foreign tax to the relevant income
FITO entitlement requires qualifying foreign income tax actually or deemed paid and the relevant Australian income-inclusion condition. Certain non-assessable non-exempt categories have special treatment. ATO FITO eligibility guidance (opens in a new tab).
Foreign tax paid after the income was included may require an amended Australian assessment. A later increase or reduction in qualifying foreign tax can also require amendment; timing and offset limits need their own review. ATO FITO eligibility guidance (opens in a new tab).
Reconcile currency and reporting periods
Foreign income, deductions and tax offsets must be converted to Australian dollars. The permitted exchange-rate method depends on the circumstances and type of amount; no exchange rate is supplied here. ATO worldwide income guidance (opens in a new tab).
Foreign income years may differ from Australian periods, requiring apportionment. This article excludes treaty conclusions, entity-specific rules, FITO arithmetic and personal tax estimates; original statements and payment evidence remain relevant. ATO worldwide income guidance (opens in a new tab).