Allocation of income under article 8 of Australian treaties

On 28 August 2013, the Australian Taxation Office released for comment Draft Taxation Ruling TR 2013/D5 (the Draft Ruling) that deals with the circumstances in which the ships and aircraft article of Australia's double tax treaties (equivalent to article 8 of the OECD Model) allocates Australia a right to tax and how that income is taxed under the domestic provisions.

The Draft Ruling says that Australia has the right to tax income from ship operations confined solely to places in Austr…