Melbourne Law School - Theses

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End date: 2002 × Start date: 2002 × Subject: Australia income tax × Subject: law ×

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    The continued application of source-based taxation in an electronic commerce environment
    Pinto, Dale ( 2002)
    The advent of electronic commerce has caused many to question the continued viability of sourced-based taxation. Characteristics of electronic commerce include the expected reduction in the need for certain intermediaries in the business process, as well as the borderless and intangible nature of the Internet, which allows a business to earn income without it having to maintain a physical presence in the market territory. In light of these characteristics it is not difficult to see how arguments calling for the abandonment of source-based taxation continue to be raised. While the thesis accepts these observations as being valid, nevertheless it will be argued that source-based taxation is theoretically justifiable for income that arises from international transactions which are conducted in an electronic commerce environment. However, it will also be argued that the way in which the source of income is defined needs to be reconceptualised because the application of source-based taxation under traditional principles may be rendered problematic in light of certain characteristics of electronic commerce that are significant from a tax perspective. In summary, three main outcomes will emerge from this research, which flow from the arguments undertaken in the thesis: 1. Source-based taxation is theoretically justifiable for income that arises from international transactions which are conducted in an electronic commerce environment. The implication of this assertion is that source-based taxation of electronic commerce transactions should continue. 2. The way in which source is currently defined for electronic commerce transactions needs to be reconceptualised because of certain characteristics of electronic commerce that are significant from a tax perspective. 3. Various models for this reconceptualisation can be considered and three possible models will be examined and analysed for this purpose.