Private ruling: FITO - deemed disposal
Date of advice: 27 January 2026
Published: 23 March 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Are you eligible to claim the foreign income tax offset (FITO) under Division 770 of the Income Tax Assessment Act 1997 (ITAA 1997) for the Country A capital gains tax (CGT) that becomes payable when the properties are eventually sold? | A1: Yes. The Country A deemed disposal tax on the properties relates to the same income (capital gain) that will be included in your Australian assessable income for the income year they are sold. If the Country A tax is deferred until the year the properties are sold, then you would be eligible for FITO as long as you have a tax liability in that income year.

Relevant facts and circumstances: In or around 20XX, you became the sole owner of units in the Unit Trust (the Trust). In or around 20XX, you solely purchased the dwelling located at property A in Australia. At various times you treated the property A as your main residence. In or around 20XX, you solely purchased the dwelling located at property B in Australia. Together the Trust, property A and property B form the Properties. In 20XX, you departed Australia to reside in Country A. For the period you lived in Country A, you were considered: • A Country A tax resident. • A foreign resident of Australia for tax purposes. On XX XXXX 20XX, you permanently moved back to Australia and ceased being a tax resident of Country A. When you ceased to be a Country A tax resident, the Country A tax authority treated you as if you had sold most of your worldwide assets at fair market value (FMV). This occurred the day before you left Country A, even though you didn't sell the assets. The departure tax arises from the 'deemed disposition' of certain types of capital property owned at the time of emigration from Country A, which may constitute a change in tax residence. Under Country A tax law, as part of your departure from Country A, you: • were deemed to have disposed of the properties (and certain other assets) at their fair market values as at the date you ceased to be a tax resident of Country A; • made a capital gain on the deemed disposal of the properties (representing the Country A capital gain); and • will have to pay Country A tax on the capital gain arising on the deemed disposal of the properties (Country A CGT). You have arranged to defer the tax to be paid to the Country A tax authority until you have disposed of the Properties. You are currently treating property A as your main residence but intend to move into property B at an unspecified future date.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 Division 770