Tax Treatment for Foreigners and Foreign Businesses in Australia

AUSTRALIAN INCOME TAX LAW AND PRACTICE
TAX TREATMENT FOR FOREIGNERS AND FOREIGN BUSINESSES IN AUSTRALIA
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AUSTRALIAN INCOME TAX LAW AND PRACTICE
Question 1;
According to the Australian Tax Office on Federal Tax legislation, both foreigner
and foreign business are deemed as non-resident on the basis of tax aspect and not on
immigration grounds (Maisto, 2010.Pg 51.) Ideally, this has no relevant relationship with the
movement that requires travel documentation instead it is explained about tax implication an
individual or business is associated with.
A foreigner individual for tax purpose is therefore deemed different from an
ordinary resident citizen for tax purpose since they have different respective tax treatments.
Australian Tax Office on Federal Tax legislation defines a foreigner as that individual who
makes frequent visits to Australia while working around Australia and whose most work is done
while traveling across Australia (Devos and Zackrisson,2015.Pg.31.) He has deemed a foreigner
because he comes to work once in a while or even on the frequent basis.
An individual is likewise deemed foreigner if he departs and leaves Australia for
another country on permanent basis. Since he will not be spending anything or contributing to
any tax while away from Australia. This permanency foreign residency is recognized as soon as
the individual depart or moves away from Australia. The other act that makes an individual a
foreigner for tax purpose is if he spends the holiday in Australia for a period that is less than six
months similarly to number of visits he or she might be making to Australia for a duration that is
less than six months. The above-listed scenarios define a foreigner for both individual and
business for tax purpose in Australia.
Foreign business entails international activities conducted in a country that is
different from which the tax resident citizen comes from. This involves the company that is
incorporated in another state different from Australia. There are therefore agreed treaties

AUSTRALIAN INCOME TAX LAW AND PRACTICE
between the foreign countries and the country of origin when it comes to tax for purposes of
avoiding double taxation. It is further explained in Australian Tax Office7 that there are countries
of listing whose treaties are treated special for tax purpose this include states like UK, Canada,
France, New Zealand, USA, Germany, and Japan.
Any foreign businesses venture in these listed countries has special treatment but
only limited to the above-listed states. Similarly to companies and ventures incorporated
overseas or abroad subsidiaries which are included overseas are likewise termed as foreign
business. It should also be known that any international transaction that is conducted away from
the country of origin10, that business activity is termed as foreign since its initial operation was
performed in an overseas state.
In a nutshell let it be known that any business venture incorporated, registered or
that which runs its operation across the border or rather overseas qualifies to be termed as foreign
business thus generating foreign business income for tax purposes8. This venture may be
conducted by either an Australian tax resident, non-resident or even foreigner individuals all of
course with different tax treatments as a result of their position for tax purpose (Deegan,
2012.Pg.13.)
Question 2;
Australian Tax Office legislation states that there exist some factors and tax
implication that significantly differentiate between a foreign tax resident and an Australian tax
resident for tax purpose. The first item that is highly considered is the number of days within that
tax year that is spent by both parties. Australian Tax Office has regulated that for a foreigner
to be considered for tax purpose he must produce proof of dwell in Australia for some days that
are fewer than 183 days in that year of tax. On the other hand, an Australian resident for tax