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Tougher tax rules to snare foreign execs

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A report released yesterday by the Board of Taxation on tax residency rules for individuals proposes a new regime be developed to preserve the integrity of the tax system and to properly reflect an increasingly globalised economy.

Commenting on the report in today’s AFR, tax partner Clint Harding welcomed the introduction of a simplified “primary test”, which could be different for inbound and outbound individuals, and which would be used as the first gateway in determining whether someone should automatically be taxed as an Australian resident.

However, Clint warns that the Board’s focus on “stateless citizens” - people who leave Australia without establishing residency in another country to avoid paying tax - “creates a lot of noise but is not well understood”.

“Australia is a pretty good place to live. It’s not like Europe where you have 30-odd countries within a three hour flight. There is a real risk of overstepping on this perceived concern when it may not be warranted, and missing the chance to really implement a clear set of bright line tests.”

To read the full article, click here.

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