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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Australia: Source of income

Article 21 (19(3) in the old Agreement) determines, for credit purposes, the country in which certain types of income are deemed to have their source.

The new Agreement provides that income which may be taxed in Australia under the Agreement shall, for the purpose of Australian tax law, be deemed to arise from sources in Australia. The income in question relates to property, business profits, international traffic, dividends, interest, royalties, gains, employment and fringe benefits, entertainers, sportsmen and government service.

Under the old agreement:

(a) Australian tax borne by a United Kingdom resident in respect of dividends paid by a company which is a resident of Australia under Australian law is to be treated as tax on income from sources in Australia even if the paying company is also resident in the United Kingdom under United Kingdom law.

(b) Interest and royalties, which under Australian law are derived from sources within Australia or which, being derived by a non-resident of Australia, are subject to withholding tax there, are to be treated as having an Australian source.