The following situation is for an Australian resident who frequently travels to overseas countries for work purposes. This year he is organising to prepare his tax return and identified the following incomes and deductions from relevant sources. Assume Australia has tax treaties with the travelling country.

• Australian sourced income $100,000 and relevant deduction $25,000
• Italian sourced income of $75,000 (AUD) and relevant deduction of $10000
• Tax paid in Italy $16500
• Tax withheld (Australia) $10,200

Required:

How much tax does the taxpayer required to pay in Australia? What would happen if his Italian tax payable amount was AUD 25000 and not AUD 16500? This scenario ignores the Medicare levy and middle and low-income tax offset.