Tests of Foreign Origin of Income
17.77. The present exemption and credit provisions explained in Section I of this chapter, whereby relief is given against double taxation of income that has its origin outside Australia, impose Australian law tests of foreign origin. Any new credit provisions may be expected to do the same. In the Committee's view, the tests of foreign origin ought to mirror the tests of Australian origin. It is hardly appropriate that Australia should, for example, apply the tests in section 6C in determining that royalties have a source in Australia but adopt the principle in the United Aircraft Case note so as to hold that royalties paid by a resident in another country have a source in Australia. To do so would mean allowing no exemption or credit in respect of the tax paid in the foreign country.