Taxation Law: Tax Treatments for Foreigners and Residents Compared

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
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1TAXATION LAW
Table of Contents
Answer to question 2..................................................................................................................2
Identification of tax treatments for foreigners and comparing with residents for tax purpose:. 2
Answer to question 3:.................................................................................................................4
Discussion of Implications relating to identified treatment for foreigners:...............................4
References:.................................................................................................................................6

2TAXATION LAW
Answer to question 2
Identification of tax treatments for foreigners and comparing with residents for tax
purpose:
The tax treatment for the foreigners as well as Australian resident section “6-5,
Income Tax Assessment Act 1997” explains that residents will be taxed for the ordinary and
statutory income derived from every sources (Barkoczy 2018). Alternatively, “section 6-5(3)
(a), Income Tax Assessment Act 1997” explains that foreigners will be taxed based on their
ordinary and statutory income that are sourced in Australia (Douglas et al. 2015). Foreigners
are under obligation of including the Australian pension and annuities in their assessable
income, except when the foreigners are provided with the tax exemption available under the
double taxation agreement.
The Australian resident are held for assessment differently from that of the foreigners.
For the residents the income derived from the ordinary sources will be held taxable under the
ordinary sources of “section 6-5, Income Tax Assessment Act 1997” (Grange, Jover-
Ledesma and Maydew 2014). The legislative approach of taxation commissioner in “Scott v
Commissioner of Taxation (1935)” held that for residents the income should be determined
with respect to the ordinary sources (James 2015). An Australian resident are held for
taxation from all their sources in Australia whether obtained from direct or indirect sources
notwithstanding of fact that whether the taxpayer resided inside or outside of Australia during
the income year.
The residential status of both the foreigners and residents are reliant upon their
resident position. The residents based on the jurisdictional rules are held accountable for
Medicare Levy and Medicare Levy Surcharge (Jover-Ledesma 2014). While for the foreign
residents no Medicare levy is applied however the foreign residents are held liable for