Richard is a non-resident of Australia and he owns shares in EZY Enterprises, a company incorporated in the Philippines. EZY Enterprises carries out operations in the Philippines and other countries with 10% of its profits sourced from Australia. It is a non-resident of Australia. If EZY Enterprises pays a $1,000 dividend in the 2020 year and if 10% of the profits, out of which that dividend was paid, were sourced in Australia, would Richard have any tax obligations in Australia?
A) No as he is anon-resident and the company is also a non-resident
B) No as 90% of the dividend relates to profits from sources outside of Australia
C) Yes on the whole dividend amount of $1,000
D) Yes but only on 10% of the dividend amount ($100)

Question

Quizplus · Accepted Answer

The correct answer is D because Australia's tax system taxes non-residents on Australian-sourced income. Since 10% of EZY Enterprises' profits, from which the dividend is paid, are sourced from Australia, Richard would have tax obligations in Australia on that portion of the dividend, which is 10% of $1,000, or $100.

Richard Is a Non-Resident of Australia and He Owns Shares