Message-ID: <1015036473.7333.1711711857804.JavaMail.tomcat@ip-10-129-228-235> Subject: Exported From Confluence MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_Part_7332_953740888.1711711857803" ------=_Part_7332_953740888.1711711857803 Content-Type: text/html; charset=UTF-8 Content-Transfer-Encoding: quoted-printable Content-Location: file:///C:/exported.html Foreign income worksheet (for)

Foreign income worksheet (for)

The front entry screen contains information for preparers related to For= eign Capital Gains.

To open the Transaction dialog to enter Foreign income transactions, cli= ck the Worksheet button or press [Alt+W] to open the Foreign Income worksheet.

Multiple= Foreign Transactions

This dialog box contains tabs for Other foreign income = and Trans-Tasman transactions, and a Summary tab.

These are transactional dialogs used when there is more than one entry o= f the same type to be made.

The Other Foreign Income transactions amounts are totalled and declared = as income and where foreign income tax has been paid on any transaction, th= ose transactions are used in the calculation of the foreign income tax offs= et.

Where the taxpayer has a foreign Capital gain which must be disclosed at= Item 18, for the calculation of the foreign income tax offset (FITO) to be= correct, a special field has been provided at the capital gains item to en= ter the amount of the foreign capital gain.

= Important Note on foreign capital gains:

If any tax has been paid on the amount of foreign gain you have entered = in this special calculation only field at the capital gains item, you must = create am entry in the foreign income worksheet to record the amount of tax= paid (if any) on this Capital gain. Failure to do this will result in an i= ncorrect calculation and the offset.

The Trans-Tasman provides for the calculation of Australian franking cre= dits from a New Zealand company.

Unlike Tax, all Foreign income is entered in this dialog =E2=80=93 Forei= gn Salary and Wages, Foreign Pensions, Attributable foreign income and all = other Foreign source income.

Other Forei= gn transactions

Information recorded for each foreign income transaction:

Field Description
Description Enter a brief description of the transacti= on
Type of Income This is required for integration purposes = as entries in the foreign income dialog can be generated from other items i= n the return. For example, the Distributions dialog which allows foreign in= come transactions to be entered at the same time as the other income and cr= edits received from the MIF.
Foreign Country code Press [F10] = for the available foreign currency codes. Select the method of conversion a= nd the Australian Dollar amount will be calculated.
Exchange rate method Select from the Exchange rate method to be= used: Actual, Average or Year End
Foreign Currency Enter the amount in the foreign currency f= or the transaction grossed up by the foreign tax paid. For example, an inco= me amount of USD$2000 on which foreign tax of USD200 has been paid is enter= ed as 2200. Do not include any amounts o= f Exempt Foreign Employment Income or Foreign Capital Gains as transactions= . Enter Exempt foreign employment income in the front entry screen. and cre= ate a transaction for any foreign tax paid on a Foreign Capital Gain includ= ed in Net Capital Gains.
Exchange rate If you have selected a foreign currency, t= he relevant exchange rate will pre-fill this field. Otherwise enter the exc= hange rate for the currency to Australian dollars (AUD) for the particular = foreign currency. The amount entered will be calculated and displayed in th= e Australian $ field.
Reasonably related deductions

From the total deduction for th= e transaction enter in this field the amount that can be said to be reasona= bly related to the income. This breakdown is required for the correct calcu= lation of the FITO limit (the cap).

Whether a deduction reasonably re= lates to the disregarded amounts will be a question of fact depending on th= e circumstances of the taxpayer. Expenses that relate exclusively to the di= sregarded income amounts will be ignored in calculating the second element = of the cap calculation. Deductions that relate to both the disregarded inco= me amounts and other assessable income will need to be apportioned on a rea= sonable basis between the different income amounts. Refer to Schedule 1, it= em 1, subparagraph 770-75(4)(b)(ii) of the ITAA 1997.

Allowable deduc= tions for items such as debt deductions (these should be entered at D15 for the individual return and the relevant item expense = label in the other form types), gifts, contributions, superannuation and ta= x agent's fees (these should be entered at the relevant expense item in the= relevant return) are not considered to be reasonably related amounts.

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Net amount This is the result of the In= come amount less the Reasonably related deduction amounts, and is calculate= d by the system
Eligible foreign tax paid Only that amount of the fore= ign tax paid that relates to eligible foreign income should be entered at t= his field.
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The system does no= t calculate the Foreign income tax offset at this point but does so only wh= en you click [F4] after saving and exiting the worksheet. = The FITO cap can only be calculated when all the income and deductions for = the return have been processed. Therefore the user controls at what stage t= he return is complete and the estimate is to be prepared. Each time you cha= nge the Taxable Income or loss in the return, you will need to press [F4] so that the FITO cap and the offset can be recalculated usi= ng the revised figures.

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