How is the foreign income offset determined?

The determination of the foreign income offset is primarily based on the foreign tax paid on assessable income. This approach recognizes that taxpayers can offset their income tax obligations in their home country by the amount of taxes they have already paid to foreign jurisdictions. This mechanism helps to prevent double taxation, which would occur if an individual were taxed on the same income in both their home country and the foreign country where the income was earned.

Typically, the offset is calculated by examining the specific foreign income that has been taxed and comparing it against the tax liability that would have been incurred in the home country on that same income. This ensures that the individual is not unduly penalized for earning income abroad while fulfilling their tax obligations both domestically and internationally.

The other options do not accurately reflect the methodology for determining the foreign income offset. Total worldwide income encompasses all earnings but does not account for the specifics of foreign taxes paid. Personal expenditures and the type of employment held abroad could influence overall financial status but do not directly relate to how the offset is calculated. Therefore, focusing on the foreign tax paid provides the correct basis for the offset calculation.