Taxation Law

Running head: TAXATION LAW
Taxation Law
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TAXATION LAW1
Introduction:
Like most of the countries, Australia has the jurisdiction of imposing tax on the basis
of residency and source. Usually, residents are levied tax for the income from global sources,
while the non-residents are only taxed for their income earned from Australian sources. In
regard to the non-residents that earn dividends, interest or royalties from the Australian
payers, they are subjected to withholding taxes based on their gross earnings (Murray &
Sarah, 2018). There is a widespread myth that those departing from Australia on short-term
basis for two years would certainly suffice for a person to be the non-resident for the taxation
purpose. This is mainly because of para 25 of the IT 2650 which essentially states that where
a person is absent from Australia for 2 years would usually be treated by ATO as the
substantial period for a taxpayer’s stay in overseas nation.
The taxation for expatriates is considered very much complex and they need to be
conscious regarding detailed concessions and pitfalls for those individuals whose
employment arrangement makes leave the Australian shores. The essay is based
understanding the implications of judgement for the expatriates made in “Harding v
Commissioner of Taxation [2018] FCA 837” and “Harding v Federal Commissioner of
Taxation [2019] FCAFC 29”. Special emphasis would be paid on the tax implications for
expatriates that are living in overseas.
Implications for Australians living as expats in other countries
With the rise in the globalization of trade and business, the geographic motilities of
numerous workforces has also followed the identical suit. These type of taxpayers can be
challenging while making an attempt, particularly when they maintain their assets such as
home in Australia and leave the family members while moving overseas for the prolong time
period (Mkttax.com.au, 2019). The taxation system in Australia is usually referred to as the

TAXATION LAW2
residence or territorial based system. The Australian residents for taxation purpose are levied
taxes on their worldwide earnings from all the sources while the non-residents are usually
imposed taxes for the income made in Australia.
For the Australian expatriates while living in overseas there could be three alternative
tax implications. At first, they continue to remain an Australian tax resident and they are
levied taxes on all their worldwide earnings however allowed to claim credits for the taxes
paid in foreign (Accru, 2019). Secondly, they remain an Australian resident under the
Australian taxation law, but simultaneously become the tax resident in the foreign nation as
well. If Australia has the double taxation treaty with that nation, then the ability of Australia’s
to impose taxes gets restricted or omitted. Thirdly, the person turns into the non-resident of
Australia under the laws and they are only imposed taxes in Australia on certain types of
incomes and gains that are sourced in Australia.
For the expatriates, it is worthy to not simply ignore the matters associated to taxation
that requires proper attention before departing from Australia following the completion of the
expatriate assignment. In the conversation that follows, it is very much presumed that the
individual is not treated as resident after leaving Australia (Deloitte, 2019). Non-residents
should be aware that beside the Australian tax liability in regard to gains and income sourced
in Australia, there could also be tax liability for the employee share benefits or the plans
relating to deferred bonus that are partially in regard to the period of Australian employment.
Expatriates need to adhere the tax return requirements since arrangements should be
made regarding the lodgement of tax return for the year in which a person leaves Australia.
The same questions were asked and answered in the latest judgement of the federal court in
Australia. As held in “Harding v Commissioner of Taxation [2018] FCA 837”, the
judgement handed down that a person who is an Australian citizen had resided out of