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Australia — Orbitax Country Chapters

Table of Contents

UPDATE STATUS

ABOUT THE AUTHOR

1. FORMS OF DOING BUSINESS

1.1. Main Forms of Doing Business with a Legal Presence

1.1.1. Main Forms of Doing Business

1.1.1.1. Summary of Main Business Forms

1.1.1.2. Main Forms for Cross-Border Business and Cross-Border Structuring

1.1.1.3. Company

1.1.1.4. Partnership

1.1.1.5. Trust

1.1.1.6. Joint Venture

1.1.1.7. Branch

1.1.1.8. Specific Uses of Available legal Entities

1.1.1.8.1. Company

1.1.1.8.2. Partnership

1.1.1.8.3. Trust

1.1.1.8.4. Joint Venture

1.1.1.8.5. Branch

1.1.1.9. Specific Constraints of Available Legal entities

1.1.1.9.1. Company

1.1.1.9.2. Partnership

1.1.1.9.3. Trust

1.1.1.9.4. Branch

1.1.1.10. Types of Partnerships and Hybrid Entities Available for International Business / Structuring

1.1.1.10.1. Types of Partnerships and Hybrid Entities

1.1.1.10.2. Tax Treatment of Partnerships and Hybrid Entities

2.1. Main Formation Requirements

2.1.1. Company

2.1.2. Branch

2.1.3. Partnership

2.1.4. Trust

2.1.5. Joint Venture

2.2. Tax Consequence of Contributions

2.2.1. Capital Contribution to a Company

2.2.2. Capital Contribution to a Partnership

2.2.3. Capital Contribution to a Trust

3. CORPORATE RESIDENCE

3.1. Corporate Tax Residence

3.2. Practical Aspects of Tax Residence

3.2.1. Incorporation

3.2.2. Carrying on Business in Australia

3.2.3. Central Management and Control

3.3. Potential Exclusion from Treaty Benefits for Failure to Meet Residence Test

3.4. Potential Loss of Tax Residence Status by Domestic Entities

3.5. Potential Acquisition of Tax Residence Status by Foreign Entities

3.6. Deemed Acquisition of Tax Residence Status by Foreign Entities

3.7. Tax Consequences of Acquisition or Loss of Tax Residence

3.7.1. On Asset Values

3.7.2. On Losses

3.7.3. On Group Treatment

3.7.4. On Existing Foreign Tax Credits

3.7.5. Starting Point for Acquisition/Loss of Fiscal Residence

3.7.6. Loss of Residence Pursuant to a Tie-Breaker Rule

3.8. Specific (Deemed) Residence Rules for Partnerships, Hybrid and Specific Other Entities

3.8.1. Partnerships

3.8.2. Hybrid Entities

3.8.3. Pension Funds

3.8.4. Qualification for Tax Treaty Benefits

4. PERMANENT ESTABLISHMENTS

4.1. Foreign PE of a Domestic Entity

4.1.1. The Concept of a Permanent Establishment

4.1.2. General Rules for Foreign PE Income

4.1.3. General Rules for Foreign PE Losses

4.2. Domestic PE of a Foreign Entity

4.2.1. Threshold and Tests

4.2.2. Agency PE

4.2.3. Ownership, Rental or Operation of Real Estate or Movable Tangible Assets

4.2.4. Affiliated Entity as a PE

4.2.5. Online Services

4.2.6. Service PE

4.3. PE Force of Attraction Principle

4.4. Branch Profit (Deemed) Remittance Tax

4.5. PE Risk Grid for Foreign Entities Involved in Business Activities

5.1. Tax Base for Resident Entities

5.2. Treatment of Foreign Profits / Losses

5.2.1. Integration of Foreign Profits and Losses

5.2.2. Treatment of Foreign Exchange Differences

5.3. Tax Consolidation / Group Treatment

5.3.1. Requirements

5.3.2. Consequences

5.3.3. Illustrative Example

5.4. Tax Base for Non-Resident Entities

5.5. Source Rules with Respect to Income Derived by Non-Residents

5.5.1. Dividends

5.5.2. Interest

5.5.3. Royalties

5.5.4. Capital Gains

5.6. Qualification of Specific Income Categories for Tax Purposes

5.6.1. Income from Stocks and Securities (Including Hybrid Instruments)

5.6.2. Income from Licensing, Leasing and Rental

5.6.3. Income from the Provision of Technical, Consultancy and Similar Services 35

6. DETERMINATION OF TAXABLE INCOME

6.1. Main Rules Governing the Determination of Taxable Income

6.2. Main Differences between Commercial and Tax Accounting

6.3. Depreciation and Amortization

6.3.1. General Rules

6.3.2. Depreciable and Non-Depreciable Assets

6.3.3. Rights and Natural Resource Licences

6.3.4. Telecommunications Equipment

6.3.5. Person Entitled to Claim Depreciation

6.4. Reserves and Provisions

6.5. Deductions

6.5.1. Main Rules for Deductions

6.5.2. Financing Costs

6.5.2.1. Bank Charges

6.5.2.2. Interest

6.5.2.3. Debt Waivers

6.5.2.4. Bad Debts

6.5.3. Royalties

6.5.4. Commissions and Licensing Fees

6.5.5. Buy-In and Cost-Sharing Contributions

6.5.6. Special Remunerations (E.g. Bonuses and Directors’ Fees)

6.5.7. Direct and Indirect Taxes and Similar Levies

6.5.8. Tax and Non-Tax Penalties and Similar Sanctions

6.5.9. Employee Share Scheme (Establishing and Administering Expenses)

6.6. Excluded and Segregated Income

7.1. Ordinary and Capital Losses

7.2. Domestic and Foreign Losses

7.3. Carry-Forwarding of Losses

7.3.1. Continuous Business Ownership and Control Test

7.3.2. Same Business Test

7.4. Special Rules for Particular Entities

7.4.1. Consolidated Corporate Groups

7.4.2. Trusts

7.4.3. Others

7.5. Record-Keeping Requirements

8.1.1. Other Taxes

8.2. Non-Residents

8.2.1. Corporate/Profit Taxes

8.2.2. Withholding Taxes

8.3. Exit Strategies

9. FOREIGN TAX CREDITS

10. INCENTIVES AND SPECIAL REGIMES

10.1. Holding Regimes

10.2. Financing Regimes

10.2.1. Pooled Development Funds

10.2.2. Venture Capital

10.3. Intellectual Property Management Regimes

10.4. Specific Regimes

10.4.1. Research and Development

10.4.2. Shipping

10.4.3. Headquarters

10.4.4. Distribution Centres

10.4.5. Small Businesses Tax Concessions

10.5. Other Regimes

10.5.1. Oil and Gas

10.5.2. Mining

10.6. Incentives

11. BUSINESS TRANSFORMATION AND RE-ORGANIZATION

11.1. Direct and Indirect Tax Consequences of Re-Organizations

11.1.1. Mergers

11.1.2. Demergers

11.1.3. Contributions of a Branch of Activities

11.1.4. Exchange of Shares

11.2. Tax Consequence of Business Emigration, Corporate Inversions and the Cessation of Business

11.2.1. Business Emigration

11.2.2. Corporate Inversion

11.2.3. Cessation of Business

12. VAT ON INTERNATIONAL TRANSACTIONS

12.1. VAT on the Supply of Goods by Non-Residents

12.1.1. General Principle

12.1.2. Supply of Goods

12.2. VAT on the Supply of Services by Non-Residents

12.3. Refund of VAT to Non-Residents

13. BASE PROTECTION AND ANTI-AVOIDANCE MEASURES

13.1. GAAR and General Anti-Avoidance Measures

13.1.1. Main General Anti-Avoidance Rule

13.1.2. Specific Anti-Avoidance Rules

13.2. Thin-capitalization and other Restrictions to Interest Deduction

13.2.1. Overview

13.2.2. Entities Affected

13.2.3. Exemptions

13.2.4. Limitations upon Debt Holdings

13.2.5. What Constitutes Deductible Amounts

13.2.6. What Constitutes Debt

13.2.7. What Constitutes Equity Capital

13.2.8. Interaction with Transfer Pricing Provisions

13.2.9. Interaction with Tax Treaties

13.2.10. Diagrammatic Presentation of Steps in the Application of the Thin-Capitalisation Provisions

13.2.11. Numerical Illustration

13.3. CFC and Similar Regimes

13.3.1. Scope of Application

13.3.2. Definition of CFC

13.3.3. Definition of Low-Tax Jurisdictions

13.3.4. Definition of Control

13.3.5. Definition of Tainted Income

13.3.6. Attributable Income of the CFC

13.3.7. Attributable Taxpayer

13.3.8. Method of attribution to Resident Shareholders

13.3.9. Utilization of Foreign Taxes and Avoidance of Double Taxation

13.4. Transfer Pricing

13.4.1. Main Rules

13.4.2. Accepted Methods

13.4.3. Specific TP Issues

13.4.4. Documentation Requirements

13.4.5. APAs and Dispute Resolution Mechanisms

13.5. Other Anti-Avoidance Rules

14. TAX MANAGEMENT AND COMPLIANCE

14.1. Books and Records

14.2. Type of Assessment

14.3. Calendar of Important Compliance Events

14.3.1. Tax Year

14.3.2. Deadlines for Filing Corporate Tax Returns

14.4. Tax Audits

14.4.1. Audit Process

14.4.2. Statute of Limitations

14.5. Interest and Penalties

14.5.1. For Non-Filing and/or Non-Payment

14.5.2. For Late Returns and/or Late Payment

14.5.3. For Inaccurate/Incorrect Filing

14.5.4. For Omission of Income or Overstatement of Deductions

14.6. Interest Compensation for Overpayment of Tax

14.7. Appeal Procedures

15. TAX CONTROVERSIES

4.2.4. Affiliated Entity as a PE

There are no specific provisions governing such cases. The general principles outlined above will therefore apply in such situations.

Author Orbitax
Country Australia
Updated 30 March 2023
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