Comprehensive tax-based assessment method

How to complete the comprehensive tax-based assessment method.

Last updated 25 June 2019

Under the comprehensive tax-based assessment method, you assess your total foreign income using Australian taxation rules. Your foreign-sourced income is the difference between your total (pre-tax) foreign income and the deductions that would be allowable under the income tax law if that income was assessable in Australia.

This method allows you to claim specific deductions as if you were living and earning your income in Australia.

Completing this section

Gross foreign income when a non-resident for tax purposes

Foreign-sourced income is income you earned from outside Australia when you were a non-resident for tax purposes, for example, when working overseas.

You must report all the foreign-sourced income that you earned during the 2018–19 income year as a non-resident for Australian tax purposes in this section. You must do this even if tax was taken out in the country where you earned the income. Remember to report all foreign source income earned while an Australian resident in your Australian tax return. For more information, see Foreign source income and foreign assets or property.

All amounts must be converted to Australian dollars before being reported, using the average annual exchange rate for the financial year most closely corresponding to the 2018–19 income year. For assistance converting your currency, you can use the foreign income conversion calculatorThis link opens in a new window.

This section includes:

Salary, wages
Allowances
Government allowances
Pensions (government pensions and superannuation)
Interest
Dividends
Other income

You must provide the gross amount (pre-tax amount) of your foreign income. The foreign income you need to report may consist of the following:

Salary, wages

Income from salary or wages includes:

salary and wages
commissions
bonuses
income from part-time or casual work
parental leave pay
amounts for lost salary or wages paid under
- an income protection policy
- a sickness or accident insurance policy
- a workers compensation scheme.

Allowances

Payments of income from working (other than salary or wages) include:

employment allowances – for example, car, travel, meals, entertainment, tools, clothing, laundry and site allowances
tips, gratuities
consultation fees.

Government allowances

Government allowances include allowances paid to you by a foreign government that form part of your foreign-source income. For example:

unemployment benefits
sickness allowances
education payments
parenting payments
other government provided income support.

Pensions (government pensions and superannuation)

Pensions include foreign government pension payments and superannuation income. Some types of government pensions are:

age pension
carer payment
disability pension
military pension.

Interest

Your foreign income may include any interest paid or credited to you from any source outside Australia, including:

interest from savings accounts, term deposits and cash management accounts
interest from children’s savings accounts you opened or operated with funds that were yours or you used as if they were yours.

Dividends

Your foreign income may include dividends and distributions that were paid or credited to you by foreign companies while you were a non-resident such as:

dividends applied under a dividend reinvestment plan
dividends that were dealt with on your behalf
bonus shares that qualify as dividends
distributions by a corporate limited partnership
dividends paid by a corporate unit trust
dividends paid by a public trading trust
dividends paid by a listed investment company.

Note: If you received dividends from an Australian company while you were a non-resident, this should be included in your Australian income tax return section.

Other income

Other income that may form part of your foreign income includes income you earned as a non-resident such as:

royalties
bonus amounts distributed from friendly society income bonds
scholarships, bursaries, grants or other educational awards
income from activities as a ‘special professional’ that you have not included elsewhere on this form (author of a literary, dramatic, musical or artistic work, inventor, performing artist, or active sportsperson)
any balancing adjustment when you stop holding a depreciating asset (for example, because of its disposal, loss or destruction) for which you have claimed a deduction for depreciation or decline in value in previous years; your car, for example, is a depreciating asset
payments made to you under an income protection, sickness or accident insurance policy where you were self-employed and the payments replaced income, that have not already been included elsewhere.

Foreign deductions when a non-resident for tax purposes

You may be able to claim deductions for expenses you incurred in earning your foreign income. For example, work-related expenses you incurred while performing your job as an employee.

The three golden rules for claiming a deduction for a work-related expense apply:

you must have spent the money yourself and not been reimbursed
the expense must be directly related to earning your income, and
you must have a record to prove it

Any expenses you claim must reflect the expenses that would be allowable as a deduction if the foreign income was assessable in Australia and the same record keeping rules apply. For more information, see Claiming deductions.

Deductions covered in this section:

Work related - employee
- Car
- Travel
- Clothing
- Self-education
- Other expenses
Depreciation
Interest and dividends
Undeducted Purchase Price (UPP) of a foreign pension
Personal superannuation contributions
Other
Prior year tax losses

Work related – employee

You may be able to claim deductions for work-related expenses you incurred while performing your job as an employee.

You incur an expense in an income year when:

you receive a bill or invoice for an expense that you are liable for and must pay (even if you don’t pay it until after the end of the income year), or
you do not receive a bill or invoice but you are charged and you pay for the expense.

If an expense includes an amount of indirect tax such as a goods and services tax (GST) or a value added tax (VAT), the GST/VAT is part of the total expense and is therefore part of any deduction. For example, if you incurred union fees of $440 which included $40 GST/VAT, you claim a deduction for $440.

Include here the total of the following work-related expenses incurred as an employee.

Car

Work-related car expenses are expenses you incurred as an employee for a car you:

owned
leased, or
hired under a hire-purchase agreement.

For more information, including the methods to calculation deductions for car expenses, see Car expenses.

Travel

Work-related travel expenses are travel expenses you incur in performing your work as an employee. They include:

public transport, including air travel and taxi fares when travelling for work
bridge and road tolls, parking fees and short-term car hire when travelling for work
meal, accommodation and incidental expenses you incur while away overnight for work
expenses for motorcycles and for vehicles with a carrying capacity of one tonne or more, or nine or more passengers, such as utility trucks and panel vans
actual expenses (such as petrol, oil and repair costs) you incur to travel for work in a car that is owned or leased by someone else.

Parking at, or travelling to a regular workplace is not ordinarily considered to be a work-related use of the car.

If your employer provided a car for you or your relatives’ exclusive use and you were entitled to use it for non-work purposes, you cannot claim a deduction for its running costs, such as petrol, repairs or other maintenance. This includes a car provided under a salary sacrifice agreement. However, you can claim expenses such as parking, bridge and road tolls for work-related use..

Clothing

You can claim expenses you incurred as an employee for work-related:

protective clothing
uniforms
occupation-specific clothing, and
laundering and dry-cleaning of clothing listed above.

You can claim the cost of a compulsory work uniform that is distinctive (such as one that has your employer’s logo permanently attached to it). It can be a set of clothing or a single item that identifies you as an employee of an organisation. There must be a strictly enforced policy making it compulsory to wear that clothing at work. Items may include shoes, stockings, socks and jumpers where they are an essential part of a distinctive compulsory uniform and the colour, style and type are specified in your employer’s policy.

You can also claim the cost of:

occupation-specific clothing which allows people to easily recognise that occupation (such as the checkered pants a chef wears when working) and which are not for everyday use
protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment. Items may include fire-resistant clothing, sun protection clothing, safety-coloured vests, non-slip nurse’s shoes, steel-capped boots, gloves, overalls, aprons, and heavy duty shirts and trousers (but not jeans). You can claim the cost of protective equipment, such as hard hats and safety glasses at Other expenses
renting, repairing and cleaning any of the above work-related clothing.
If you did washing, drying or ironing yourself, you can use a reasonable basis to calculate the amount, such as AUD$1 per load for work-related clothing, or 50 cents (AUD) per load if other laundry items were included.

You cannot claim the cost of purchasing or cleaning plain uniforms or clothes, such as black trousers, white shirts, black shoes, suits or stockings, even if your employer requires you to wear them.

Self-education

You can claim self-education expenses that are related to your work as an employee and which you incur when you do a course to get a formal qualification from a school, college, university or other place of education.

To claim a deduction for self-education expenses, you must have met one of the following conditions when you incurred the expense:

the course maintained or improved a skill or specific knowledge required for your work activities at that time
you could show that the course was leading to, or was likely to lead to, increased income from your work activities at that time
other circumstances existed which established a direct connection between the course and your work activities at that time.

You cannot claim a deduction for self-education expenses for a course that:

relates only in a general way to your current employment or profession, or
will enable you to get new employment.

You cannot claim contributions you, or the Australian Government, made under the HECS-HELP or repayments you make under the Higher Education Loan Program (HELP), the Student Financial Supplement Scheme (SFSS), the Student Start-up Loan (SSL) or the Trade Support Loan Program (TSL).

Examples of expenses you can claim are:

textbooks
stationery
student union fees, student services and amenities fees
the decline in value of your computer
certain course fees.

Other expenses

Other work-related expenses are expenses you incurred as an employee and have not claimed above. These include:

union fees and subscriptions to trade, business or professional associations
professional seminars, courses, conferences and workshops
reference books, technical journals and trade magazines
the work-related portion of safety items that protect you from the risk of injury or illness posed by your work or your work environment, such as hard hats, safety glasses and sunscreens
the work-related proportion of some computer, phone and home office expenses
the work-related portion of tools and equipment and professional libraries (you may be able to claim an immediate deduction for the full cost of depreciating assets costing $300 or less; for more information see Guide to depreciating assets).

You cannot claim a deduction for the decline in value of items provided to you by your employer, or if your employer paid or reimbursed you for some or all of the cost of those items, and the benefit was exempt from fringe benefits tax.

For your home office expenses, you can:

keep a diary of the details of your actual costs and your work-related use of the office, or
use a fixed rate of 52 cents (AUD) per hour for heating, cooling, lighting and the decline in value of furniture in your home office.

Depreciation

You may be able to claim a deduction for the decline in value of a depreciating asset which you held during the income year to the extent that you used it to produce income that you have reported in the non-resident foreign income section.

Depreciating assets include items such as tools, reference books, computers and office furniture.

You may be able to claim an immediate deduction for the full cost of depreciating assets costing $300 or less. You can use the Depreciation and capital allowance toolThis link opens in a new window to work out your deduction if the cost is not fully deductible.

Interest and dividends

Interest

Include any allowable expenses that you would be entitled to claim if the foreign income you reported in the Non-resident foreign income section were assessable income in Australia. Expenses include:

bank or other financial institution account-keeping fees for accounts held for investment purposes
fees for investment advice relating to changes in the mix of your investments
interest you paid on money you borrowed to purchase income-producing investments.

If you had a joint account or if you shared an interest-earning investment, claim only your share of the joint expenses.

If you borrowed money to purchase assets for your private use and income-producing investments, you can claim only the portion of the interest expenses relating to the income-producing investments.

You can claim a proportion of the decline in value of your computer based on the percentage of your total computer use that related to managing your investments. If you have different investments, such as interest-earning investments and shares, claim this deduction only once.

Dividends

Include any expenses you incurred earning the gross foreign dividends you reported.
Expenses include:

fees for investment advice relating to changes in the mix of your shares or similar investments
interest incurred on money borrowed to purchase shares or similar investments
costs relating to managing your shares or similar investments, such as travel and buying specialist investment journals or subscriptions.

If you had joint share investments or similar shared investments, you can claim only your share of joint expenses.

If you borrowed money to purchase assets for your private use and income-producing investments, you can claim only the portion of the interest expenses relating to the income-producing investments.

UPP of a foreign pension

You may be entitled to claim a deduction to reduce your reported foreign pension or annuity income if your pension or annuity has an undeducted purchase price (UPP).

Only some foreign pensions and annuities have a UPP. The UPP is the amount you contributed towards the purchase price of your pension or annuity (your personal contributions).That part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. This tax-free portion is called the deductible amount of the UPP, and it is usually calculated by dividing the UPP of your pension or annuity by a life expectancy factor, according to life expectancy statistics.

For more information on pensions from another country, see Deductible amount of undeducted purchase price of a foreign pension or annuity.

Personal superannuation contributions

You may be able to claim a deduction for after-tax personal superannuation contributions you made to a complying Australian superannuation fund or a retirement savings account (RSA) if:

you satisfied the age-related conditions
you gave a valid notice of intent to your superannuation fund or RSA provider, in the approved form, and advised them of the amount you intend to claim as a deduction (you must give this notice on or before the day you report your 2019 non-resident foreign sourced income, lodge your 2019 tax return or 30 June 2020, whichever is earlier)
your superannuation fund or RSA provider acknowledged your valid notice
your superannuation fund was not a
- Commonwealth public sector superannuation scheme with a defined benefit interest
- constitutionally protected fund or other untaxed fund that would not include the contributions in their assessable income
- superannuation fund that notified the Commissioner before the start of the income year that they elected to treat all member contributions to the:
  - superannuation fund as non-deductible
  - defined benefit interest within the superannuation fund as non-deductible.

For more information, see Personal superannuation contributions.

Other

If you have other expenses that would be allowable as a deduction if your foreign income was assessable, which you have not been able to claim elsewhere in the Non-resident foreign income section, you can include them here.

For more information about what can be claimed, see Other deductions. Note that this link takes you to the Australian income tax return information and that some items which are specific to Australian residents do not apply in your situation.

Prior year tax losses

If you have a foreign tax loss from an earlier income year which you have not claimed as a deduction, you can include it here.

You may have a foreign tax loss this year which you may be able to claim as a deduction. You must complete this section whether or not you are able to claim a deduction for the loss this year.

If you have foreign tax losses from more than one earlier income year you should generally deduct the earliest losses first.

To complete this field you will need records of your tax losses from earlier income years.

Net foreign income (income less expenses) when a non-resident for tax purposes

Net foreign income (gross foreign income less expenses) is from overseas business and investments you made as a non-resident. This section covers:

net business income
net personal services income
net partnership and trust income
net capital gains
net rent

You must include your net foreign income here.

Net business income

If you derived non-resident foreign income or incurred a foreign loss from any business carried on overseas include it here. This includes:

income or loss from being a sole trader
income or a loss from a primary production business
income or loss of an independent contractor working under a labour hire arrangement
income or loss as a performing artist in a promotional activity
any other business income or loss.

For more information, see Business and Professional items.

Net personal services income

Complete this field if you received foreign income for personal services you provided as a non-resident sole trader and you:

did not receive a personal services business determination in relation to your personal services income (PSI)
did not satisfy the results test, or
did not satisfy at least one of the other three personal services business tests
(if less than 80% of your PSI came from each client).

Personal services income is income that is mainly a reward for an individual's personal efforts or skills. To work out whether your income is personal services income you can use the Personal services income toolThis link opens in a new window or see Personal services income for more information. To work out your net personal services income, see Business and Professional items.

Net partnership and trust income

If you received non-resident foreign income from partnerships or trusts include it here. Include your share of:

primary production partnership income or loss, and
non-primary production partnership income or loss.

If the partnership in which you were a partner paid you salary, wages or allowances, you must show that income here.

If you received, or were entitled to, a distribution of trust income, you must enter that amount here.

Net capital gains

If your non-resident foreign income includes a capital gain or a capital loss made for an asset that is not taxable Australian property you hold or held during the year, include it here. Under the Australian tax law, for most CGT events, you make a:

capital gain if the amount of money and property you received, or were entitled to receive, from the CGT event was more than the cost base of your asset; you may then have to pay tax on your capital gain
capital loss if the amount of money and property you received, or were entitled to receive, from the CGT event was less than the reduced cost base of your asset.

There is a wide range of CGT events. The most common CGT event happens when you sell or give away a CGT asset. For more information, see Capital gains or losses.

Net rent

Net rent is your rental income, less your rental expenses.

Rental income

Rental income is the non-resident foreign income you earn when you rent out your property (including renting out a room through the sharing economy). You must include any bond money you:

retained in place of rent, or
kept because of damage to the property requiring repairs.

You must also include as non-resident foreign income:

an insurance payout for lost rent, or a reimbursement of any rental expenses, you claim in 2018–19 or in an earlier year
fees retained from cancelled bookings.

Rental expenses

You can claim expenses relating to your rental property but only for the period your property was rented or genuinely available for rent, for example, advertised for rent without limiting its exposure to potential clients.

Expenses can include advertising for tenants, bank charges, body corporate fees, borrowing expenses, council rates, decline in value of depreciating assets, gardening and lawn mowing, insurance, land tax, pest control, property agent fees or commissions, repairs and maintenance, stationery, phone and water charges.

If you were renting only part of your home – for example, a single room – you can claim expenses relating to renting out only that part of the house.

If you are renting only part of your home, you can claim expenses only for the period that part in your home was rented to a client. You cannot claim deductions for expenses when the room is not rented.

You cannot claim the total amount of the expenses – you need to apportion the expenses. As a general guide, you should apportion expenses on a floor-area basis based on the area solely occupied by the renter (user), and add to that a reasonable amount based on their access to common areas.

You can claim 100% of fees or commissions charged by a sharing economy facilitator or administrator.

For more information, see Rent and Renting out all or part of your home

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