Tax Treatment for Foreign Residents in Australia

Running head: TAX
Tax
Name of the Student:
Name of the University:
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1TAX
Table of Contents
Introduction:...............................................................................................................................2
Foreign Resident........................................................................................................................2
Tax Treatment for Foreigners:...................................................................................................2
When A Person Is Considered A Foreign Resident:..................................................................3
Difference between Resident and Non-Resident in Tax Treatment:.........................................3
Tax Rates for Foreign Residents:...............................................................................................3
Conclusion..................................................................................................................................3
References..................................................................................................................................5

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Introduction:
This paper is written with an intention to determine the income tax treatment for
foreign resident in Australia. It will be discussed in detail the treatment for taxation purpose
between ordinary resident and foreign resident in Australia. There are some kinds of income
that foreign resident must reveal in order to determine the taxable income, they are: any
income generated from employment, any income derived from rent, amount received from
pension and annuities and lastly incomes from capital gains from sale of Australian property.
Foreign Resident
There are different tests to find out the particular issue as prescribed by the ITAA
1997. Of course, foreign resident is not given all the privileges available for ordinary
residents and recent government policies go hard on foreign resident earning income in
Australian land, that is to say, any income that is generated from receiving salary to sale of
property giving rise to capital gains, all are taxed but in different manner depending on the
citizenship. There are namely four rules to determine the taxability according to the manner
of citizenship of an individual or a business entity. They are: 1) The ordinary Concept Rule 2)
183 days rule 3) Domicile Rule 4) Commonwealth Superannuation Fund rule (Cao et al.
2015).
Tax Treatment for Foreigners:
A foreigner who decides to do business in Australia has to consider things that are
important to do business in Australia because it has its own policies regarding doing business.
Obtaining a valid visa is of utmost importance. The visa will definitively talk about the
presence of that individual in Australian land and not ordinary resident. The fact that a
foreign resident will be treated as an individual under the ITAA 1997 for doing business
depends on the contract or any agreement between the individual and the country where he is
operating. Unlike an Australian resident who is taxed for any income earned worldwide, the
foreign residents are taxed for income that generated only in Australia (Burton 2017). This
only general relaxation is available to a foreign resident under the current Australian taxation
system. where as an Australian resident is entitled to various exemptions and deductions that
are not generally available for foreign residents.