previous
next



  ― 256 ―

Foreign-source Income Not Subject to Australian Tax

17.17. The effect of two provisions of the Australian law, noted briefly at the beginning of this chapter, is to exclude from Australian tax a very considerable part of foreign-source income of Australian residents. One of these provisions is section 23(q) which, subject to a number of exceptions, exempts from Australian tax foreign-source income that is subject to tax in the country of source. The other is section 46 which, by allowing a rebate at the Australian rate of tax, in effect exempts foreign-source dividends received by a company, whether or not the profits from which the dividends were paid, or the dividends themselves, have been subject to foreign tax.

17.18. The exclusion from Australian tax by these provisions avoids the need to give relief from the double taxation that would result were the income subject to Australian tax. In this respect they may be regarded as a method of giving relief from double taxation and can be compared with other provisions of the Act that give relief by allowing credit for foreign tax on foreign-source income subject to Australian tax. The discussion that follows is cast in the frame of such a comparison.

previous
next