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  • Source of income

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The treaty specifies that for the purposes of the taxation laws of Australia and Timor-Leste, the JPDA is deemed to be part of Australia and Timor-Leste. Income derived from working in the JPDA is therefore sourced in both Australia and Timor-Leste. Therefore, other than for residents of Timor-Leste, all income derived from working in the JPDA is assessed in Australia and a foreign tax credit or rebate is allowed for tax paid to Timor-Leste on that income.

    The effect of the treaty is:

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

    Note: Net assessable JPDA income is assessable JPDA income less allowable deductions relating to that income

    Residency status

    Residency status is determined by the laws of each country. Generally, we consider you to be an Australian resident for tax purposes if:

    • you have always lived in Australia or you have come to Australia and live here, or
    • you have been in Australia for more than half of the financial year (unless your usual home is overseas and you do not intend to live in Australia).

    The standards we use to determine residency status are not the same as those used by the Department of Immigration, Multicultural and Indigenous Affairs.

    In limited circumstances you may be considered to be a resident of both Australia and Timor-Leste. The treaty contains rules to determine the country in which you are solely a resident for the purposes of the treaty.

    If you are unsure of your residency status access the 'Are you a resident?' tool on our website ato.gov.au or phone the Personal Tax Infoline on 13 28 61.

    Zone tax offset

    The JPDA does not qualify as a remote or isolated area of Australia for purposes of the zone tax offset.

    Last modified: 05 Mar 2020QC 18003