Karen is single, residing in London, England. During the current tax year, Karen travelled to New Zealand to undertake engineering work for an Australian company. Karen was paid $12,000(AUD) for this period of work. The majority of the income was paid into an Australian bank account; however Karen directed the Australian company to pay $4,000(AUD) into her partners bank account. No interest was earned on the Australian bank account. Karen also earned $75,000(AUD) from her normal employment in England with a London engineering firm. This income was paid into her normal London bank account and $1,000(AUD) in interest income was derived during the 2021 income tax year from that account. Karen also had an investment property in Sydney, NSW. Her net rental income was $44,000(AUD) for the income year ending 30 June 2021.

Focus only on the Australian tax consequences and disregard double tax agreements.

Include references to appropriate legislation, case law and tax rulings.

Disregard GST and show all workings where required.

Advise Karen of the Australian tax consequences arising from the above fact situation for the year ending 30 June 2021 by answering the following questions:

1. Explain whether the interest and rental receipts are Australian sourced income
2. Determine Karens Australian net tax liability. If none, justify.