The income tax legislation contains complex accruals regimes that attribute income earned by foreign entities to Australian resident taxpayers who control them or have transferred value to them. Attribution occurs even though these taxpayers have not actually received the relevant income. This chapter outlines the basic features of the accruals regimes and the way they attribute income to certain taxpayers. The accruals regimes were introduced in the early 1990s and are based on United States measures that were originally developed in the 1960s. They are designed to prevent the deferral advantages associated with having certain kinds of income sheltered offshore in tax havens through interests held by taxpayers in foreign entities. Ordinarily, such income would be able to accumulate at low (or zero) tax rates in such entities until repatriated to Australia. The accruals measures operate to bring forward the point at which such income is taxed. Essentially, resident controllers and transferors are taxed on income earned by the relevant entities (eg companies or trusts) as those entities earn the income (ie on an accruals basis), rather than only when those entities subsequently distribute amounts (eg by way of dividends or trust distributions).

The outbreak of World War II saw a remnant League of Nations’ Secretariat relocating to Princeton. This ‘Princeton Mission’, supported by private American foundations and the US government, spreads the double taxation movement in the Americas, making inroads into Latin America that culminate in the negotiation of the 1943 Mexico Model.Faltering inter-American relations and the birth of the new United Nations lead the Mission to hastily organise the Fiscal Committee’s Tenth Session with little developing country representation in the attempt to legitimise its wartime work before the dissolution of the League. The result was the 1946 London Model.

Britain’s fears mount that developing countries in the Fiscal Commission will force it to cede jurisdiction to tax income from foreign investment. The Fiscal Division is chagrined by the Organisation for European Economic Co-operation’s involvement in double taxation questions by the International Chamber of Commerce and subsequently attempts to form collaborative relations with the European organisation.

The multilateral proposed changes require significant infrastructural changes to the existing tax framework. How should such changes be implemented? Some changes are required at both the domestic law level and in the public international law arena of double taxation treaties. Other changes can be made in one or other of these fields of law (domestic or international). What other matters need to be addressed? There are many questions in the area of implementation, such as dispute resolution and dispute prevention, calculation and collection of tax, use of multilateral instruments, and the prevention of double taxation.

The multilateral proposed changes require significant infrastructural changes to the existing tax framework. How should such changes be implemented? Some changes are required at both the domestic law level and in the public international law arena of double taxation treaties. Other changes can be made in one or other of these fields of law (domestic or international). What other matters need to be addressed? There are many questions in the area of implementation, such as dispute resolution and dispute prevention, calculation and collection of tax, use of multilateral instruments, and the prevention of double taxation.