Foreign income for family assistance and Paid Parental Leave scheme payments 108-03040060

There are many situations where individuals may have foreign income. Foreign income may include:

• regular receipts of money, allowances and gifts from relatives living overseas
• income from foreign business interests or investments
• an overseas pension or benefit
• employment income derived from overseas

Tax exempt foreign income includes allowances and salary of Australian Defence Force (ADF) personnel deployed to a theatre of war.

Allowances and salary of ADF personnel deployed to a theatre of war, as declared by the Australian Government (for example, Afghanistan, Iraq), can be exempt income while the person is physically in the war zone, that is, from the day they arrive to the day they depart the war zone and is not included in a customer's ATI. East Timor ceased to be classified as a war zone from 18 August 2003.

Income for other continuous periods of 91 days or more is recorded as tax exempt foreign income on the customer's payment summary and they need to include this as part of their ATI.

The References page contains a link to historical exchange rates (in Target Foreign Income).

For FTB, CCS, CCB and SBP purposes, foreign income is the amount of the following that is neither taxable income in Australia, nor received in the form of a fringe benefit:

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

For FTB, CCS, CCB and SBP purposes, the family income estimate includes two different types of foreign income:

• foreign income
• tax exempt foreign income

When providing an income estimate, customers must include the value in Australian dollars (AUD) of any foreign income they expect to receive.

Note: it is important that customers confirm with the ATO how income derived from overseas sources will be assessed for tax purposes. If it is to be included in the customer's Australian Income Tax Return (ITR), it is not classed as Foreign Income for family assistance. Instead, the customer must include this income within their estimate as part of their taxable income or as a reportable fringe benefit. See Resources for examples.

Tax exempt foreign income is paid in Australian dollars.

If the customer receives an overseas scholarship this may need to be included as income.

The conversion rate is the 'on demand buying rate' available at the Commonwealth Bank on 1 July of the tax year in which the income was received.

If the customer needs help converting the target foreign income to Australian dollars, the Service Officer can use the exchange rate as at 1 July of the relevant financial year.