Title: Should the international income of an Australian resident be taxed on a worldwide or territorial basis
Abstract: Many countries impose income tax on the worldwide income of their residents or
citizens. This is the case in Australia where ‘Australian residents for tax
purposes’ must pay income tax on their worldwide income including statutory
income such as capital gains and dividends. If the government of a country adopts
a ‘worldwide’ basis for imposing income tax on its residents then the existence of
tax havens and offshore financial centres becomes an important issue because
income from passive investments may not be disclosed and subsequently taxed in
Australia. The Australian Government has recently funded ‘Operation Wickenby’,
in an attempt to detect Australians using tax havens and reinforcing the integrity
of a worldwide taxation system. This paper will start with a discussion of the
philosophical basis for Australia having adopted a ‘worldwide’ system of taxation
as opposed to a ‘territorial system’ and then examine the problems with collecting
income tax on foreign sourced income generated by Australian residents. The
paper will then draw a conclusion as to the merits of Australia adopting a
territorial system for taxing foreign income and whether the worldwide system
should be abandoned altogether.
Publication Year: 2006
Publication Date: 2006-01-01
Language: en
Type: article
Access and Citation
Cited By Count: 1
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