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ATO Announces Updated Guidance on Residency for Foreign-Incorporated Companies — Orbitax Tax News & Alerts

The Australian Taxation Office has announced Updated guidance on residency for foreign-incorporated companies in light of COVID-19.

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Updated guidance on residency for foreign-incorporated companies

We've recently updated our guidance on corporate residency in light of the continuing impacts of the COVID-19 pandemic, and the government's announced but unenacted legislative amendments to the corporate residency test.

In the 2020–21 Budget, the government announced it intends to make technical amendments to clarify the corporate residency test. Legislation to implement these announcements remains unenacted.

Our updated web guidance on working out your residency provides our approach to corporate residency for foreign-incorporated companies and reflects the extension of the transitional compliance approach in practical compliance guideline (PCG) 2018/9.

We have extended our transitional compliance approach to corporate residency for foreign-incorporated companies that meet the requirements, outlined in PCG 2018/9, until the earlier of:

  • 30 June 2022 – for affected taxpayers with income years that end on 30 June (or 31 December 2021 for early balancers), or
  • the date on which legislation amending the corporate residency test receives royal assent.

Subject to any future legislative amendments, TR 2018/5 and PCG 2018/9 continue to provide our existing view on the central management and control test of corporate residency.

Our COVID-19 web guidance for corporate residency also remains in place. If the only reason for holding board meetings in Australia, or directors attending board meetings from Australia, is because of the effects of the COVID-19 pandemic, then we won't apply compliance resources to determine if your central management and control is in Australia.

We'll continue to evaluate the ongoing effects of COVID-19 on business. If there are further changes to our position or the law, we'll publish additional updates to our guidance.

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