Foreigners in Australia Taxation Law

Running head: AUSTRALIA TAXATION LAW
Australia Taxation Law
Name of the Student
Name of the University
Author Note

1
AUSTRALIA TAXATION LAW
Table of Contents
Introduction..................................................................................................................................2
Foreigners in Australia Taxation Law.........................................................................................2
Differences in tax treatment of Australian and foreign residents................................................4
Implications to foreigners............................................................................................................5
Recommendations for Tax Reforms............................................................................................6
Conclusion...................................................................................................................................7

2
AUSTRALIA TAXATION LAW
Introduction
In Australia, one of the biggest differences which exists between the foreign residents and
domestic residents is related to the taxability of their earnings. While the Australian residents
have to pay taxes on all of their income earned throughout the world. However, a foreign tax
resident is required to pay taxes only on the income earned and accrued through Australia. As
held in the case of Buswell, an Australian resident may also be considered as a foreign resident if
he intends to change his domicile permanently1. Hence, one of the areas which is continuously
used by the foreign residents in tax planning is their foreign residence to avoid paying the taxes
in Australia. This aspect has been extremely popular in the entities involved in the business of
minerals and their exploration. The purpose of this research is to identify the tax implications of
the foreign investors investing in the mining industry of Australia and make some further
recommendations about the changes that can be implemented in the tax system of the nation.
One of the major contributors of the foreign investment in the Australian business through
foreign direct investment is the mining industry and other operations related to it.2
Foreigners in Australia Taxation Law
According to section 6-5(3) of ITAA 1997, the assessable income of a foreign resident
includes the ordinary income derived by them from all Australian sources either directly or
indirectly in a given income year. The definition of a foreign resident includes an individual who
is not ordinarily a resident of Australia3. It also consists of a company which is not ordinarily a
company incorporated in Australia or a company in which a foreign company holds a substantial
1 Buswell v. I.R.C (1974) 2 All E.R. 520 at p. 526.
2 "Global Investors Stay Keen As Australia’S FDI Stock Reaches A$970 Billion". 2020. Austrade. Accessed January
14 2020. https://www.austrade.gov.au/news/economic-analysis/global-investors-stay-keen-as-australia-s-fdi-stock-
reaches-a-970-billion.
3 "Work Out Your Tax Residency". 2020. Ato.Gov.Au. Accessed January 14 2020.
https://www.ato.gov.au/Calculators-and-tools/Work-out-your-tax-residency/.