Australian Income Taxation Law and Practice: Implications for Foreigners

Running head: AUSTRALIAN INCOME TAXATION LAW AND PRACTICE
Australian Income Taxation Law and Practice
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1AUSTRALIAN INCOME TAXATION LAW AND PRACTICE
Table of Contents
Implications of identified tax treatments to foreigners:...................................................................2
Recommendations for relevant law reforms:...................................................................................4
References:......................................................................................................................................6

2AUSTRALIAN INCOME TAXATION LAW AND PRACTICE
Implications of identified tax treatments to foreigners:
Sourced income:
As evaluated, non-residents or foreigners are ineligible for tax-free thresholds, which has
been $18,200 for 2014-15 and $19,400 for 2015-16 and therefore, the taxation of income is made
from the initial dollar. In addition, for the income year of 2014-15, incremental tax rate is not
applicable up to $80,000; however, at a straight-up rate of 33% (Ato.gov.au 2019). In this
context, it is noteworthy to mention that a foreigner might obtain Australian residential status for
income tax purpose without forfeiting the residential status of the home nation. For example, in
the case of “Gregory v FCT (1937) 1 AITR 201”, it is observed that an individual might stay in
more than one nation at any time, which has been upheld further in “FCT v Jenkins (1982) 12
ATR 745”. However, even if a foreign taxpayer obtains the residential status in one year, it does
not imply that the individual would be considered as a resident for tax purpose in the next year.
For example, in the case of “FCT v Applegate (1979) 9 ATR 899”, it is necessary to look at
income separately for each income year (Chardon 2014).
Tax rate on income bracket:
The foreign residents in Australia often have to incur higher tax rate on their first bracket
of income. This is evident from the fact that the foreigners pay tax on every dollar earned from
the investments in Australian businesses that include the agricultural sector as well. According to
“Section 6-5(3) of ITAA 1936”, the assessable income of the foreigners would include the
ordinary income obtained directly or indirectly from each Australian source during the income