This article sets out Australia's current approach to determining the territorial source of income, focusing on the operation of the statutory source rules and the guiding principles emerging from the common law. In particular, the article discusses the source rules pertaining to: (a) income from personal exertion, including dependent and independent personal services; (b) income from business, including capital gains; and (c) income from property, including interest, dividends and royalties as well as income from real property. The article also evaluates the effectiveness of Australia's source rules in terms of equity, efficiency (neutrality) and simplicity. The article concludes that Australia's domestic source rules are ripe for reform.