Question

if a company  was incorporated in England in 1952, however did not begin operating in Austrlalia until February 2017. The head office continued to be located in England, with the majority of shareholders residing across the England. The board of directors had met monthly at the head office to discuss the objectives and the running of the firm. In February 2017, three key directors transferred to the newly opened office in Australia including a handful of the firms architectural and administrative staff. Interest is strong in Tasmania for the architecture firm, with the new clientele base building rapidly. By late-June 2017, the firm had already completed several jobs, subsequently sending out three invoices to clients with 14-day payment terms. In addition, the firm received a prepayment from a fourth client for a job scheduled to be undertaken in July 2017. ask when and which part need to be count tax in Australia and why

Answer 1

Any country charge Income Tax based upon following 2 rules -

1 Residence Rule - i.e. The country in which the country is originally based. England in the given case.

2 Source Rule - i.e. The country where the income has actually originated. Australia in the given case.

Double Tax Avoidance Aggrement (DTAA) between England and Australia should be studied to know which country would charge tax on the given income. Normally, Source country (Australia) charge tax and Resident country (England) provides tax exemption.

Therefore, the income from operations in Australia shall be taxable in Australia only and England would provide tax exemption.