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The short answer
If you are an Australian tax resident and Nigeria has taxed income you also declare in Australia, such as naira interest, Lagos rent or dividends, you can generally claim the foreign income tax offset (FITO). The ATO says you must have actually paid the tax and hold records proving it, Nigeria must have the right to tax that income, and if your claim is more than $1,000 you must first work out your offset limit. The offset may be less than the tax you paid.
What the FITO is
Australian residents are taxed on worldwide income. When the same income has already been taxed in Nigeria, the FITO reduces your Australian tax by an amount linked to the Nigerian tax. It works against your Australian tax bill, and the ATO warns that the offset "will not always be the same as the tax you paid overseas", so do not expect an exact match in every case. Because there is no Australia-Nigeria tax treaty, the FITO is the main relief on the Australian side; see whether a treaty exists.
The ATO's conditions (as at October 2026)
The ATO's page on foreign and worldwide income for residents (updated 15 June 2026) sets out these points:
- You must "have paid the tax on the income overseas" and "have records to prove that the tax has been paid".
- "The foreign country must have taxing rights over the income." If it does not, the ATO says you can ask that country for a refund.
- The offset "will not always be the same as the tax you paid overseas".
- "If you are claiming more than $1,000 you will first need to work out your foreign income tax offset limit."
- You must convert all foreign income, deductions and tax offsets to Australian dollars.
The detailed rules are in the ATO's Foreign income tax offset rules guide 2026 (updated 30 May 2026), which has sections on eligibility, calculating the offset or offset limit, record keeping and special circumstances. Use that guide if your claim is above $1,000.
Which Nigerian taxes usually count
| Nigerian income | How Nigerian tax is usually collected | What to keep |
|---|---|---|
| Bank or fixed deposit interest | Withheld by the bank; PwC gives 10% on interest (reviewed 29 May 2026) | Statement showing gross interest and tax withheld |
| Rent from a Nigerian property | Withheld by the tenant or agent at 10%, or paid on a return | Tenancy agreement, withholding tax credit notes, NRS receipts |
| Dividends from Nigerian shares | Withheld at 10%; described as final tax for non-residents | Dividend statements from the registrar |
| Gains on Nigerian assets | Assessed under Nigerian law | Assessment and payment receipts |
What does not count: charges that are not taxes on income, such as bank fees, stamp duty on transfers or land use charge. Tax you have not yet paid does not count either.
Worked example
Example only, with invented figures and an illustrative exchange rate of ₦1,000 per A$1. Tunde, an Australian resident who is not a temporary resident, lets a flat in Lagos for ₦3,000,000 a year. His tenant withholds 10%, ₦300,000, and pays him ₦2,700,000. His Nigerian fixed deposit also pays ₦400,000 interest with ₦40,000 withheld.
| Naira | A$ (example rate) | |
|---|---|---|
| Gross rent declared | ₦3,000,000 | A$3,000 |
| Gross interest declared | ₦400,000 | A$400 |
| Total Nigerian tax paid | ₦340,000 | A$340 |
| Over $1,000? | No, so no offset limit calculation needed |
Tunde declares the gross amounts, before Nigerian tax, and claims A$340 as the offset, subject to the offset not exceeding what the rules allow. If his total Nigerian tax had been above A$1,000, he would work out the limit using the ATO guide first. In practice you convert each item at the rate the ATO's translation rules point to, which may be the rate on the day received or an average rate, rather than one round figure.
Steps to claim
- Confirm you are an Australian resident for tax and whether you are also a temporary resident; temporary residents do not declare most foreign income, so there is nothing to offset. See the temporary resident exemption.
- List each Nigerian income item for the Australian income year (1 July to 30 June), not the Nigerian calendar year.
- Gather evidence of the Nigerian tax actually paid on each item.
- Convert income and tax to AUD under the ATO's conversion rules.
- Declare the gross foreign income and enter the offset in your return; if the total is above $1,000, work out the limit with the ATO guide.
- Keep the records; the ATO says investment records are generally kept for five years after it processes your return.
Common mistakes
- Declaring the net amount. Declaring only the naira that reached your account understates income and leaves nothing to attach the offset to.
- Claiming tax that was never remitted. A tenant who says they deducted 10% but cannot give you a credit note leaves you without proof.
- Mixing years. Nigerian documents run on the calendar year; the Australian income year runs 1 July to 30 June.
- Claiming as a temporary resident. If the income is not declared, there is no offset to claim.
Withholding tax credit notes are the evidence that most often goes missing. Our Nigeria library explains how to get withholding tax credit notes.
Where Pryme fits
If your naira savings sit in Pryme Savings Boxes, the interest shows in your account statements, and you can generate a verifiable statement through VerifyDoc.ai to support the record you keep for the ATO.
Questions people ask
Can I claim Nigerian tax paid on my Australian tax return?
Generally yes, through the foreign income tax offset, if you are an Australian resident, the income is taxed in Australia, you actually paid the Nigerian tax and you can prove it.
What is the $1,000 rule for the foreign income tax offset?
The ATO says if you claim more than $1,000 you must first work out your foreign income tax offset limit, using its FITO rules guide.
Do I declare Nigerian income gross or net of tax?
Gross. Declare the income before Nigerian tax and claim the Nigerian tax as the offset.
What proof does the ATO accept for Nigerian tax?
Records showing the tax was paid, such as bank statements showing withholding, withholding tax credit notes or NRS receipts. Keep them with your tax records.
Sources
- ATO: Australian resident for tax purposes, foreign and worldwide income (updated 15 Jun 2026) · accessed Oct 2026
- ATO: Foreign income tax offset rules guide 2026 (updated 30 May 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- ATO: Translation (conversion) rules · accessed Oct 2026
- ATO: Keeping good investment records (updated 22 Jun 2026) · accessed Oct 2026
- Mondaq (Nolands): Taxation of non-resident individuals in Nigeria (30 Sep 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.