• Source of income

    The treaty specifies that for the purposes of the tax laws of Australia and Timor-Leste, the JPDA is deemed to be part of Australia and Timor-Leste. Therefore, income derived from working in the JPDA is sourced in both Australia and Timor-Leste.

    The effect of the treaty is that:

    • Australian residents are taxed on their total JPDA income at resident rates of tax, with a foreign income tax offset allowed for the lesser of the
      • Australian tax payable on the net assessable JPDA income*, and
      • tax paid to Timor-Leste
       
    • residents of Timor-Leste are taxed on 10% of their net assessable JPDA income* at foreign resident rates of tax
    • residents of countries other than Australia and Timor-Leste are taxed on their total JPDA income at foreign resident rates of tax, with a tax offset allowed equal to 90% of the Australian tax payable on their net assessable JPDA income*.

    * Net assessable JPDA income is assessable JPDA income less allowable deductions relating to that income.

    Last modified: 31 May 2016QC 48240