Latest News

Hot Issues
spacer
15,000 tip-offs as ATO black economy hotline rings hot
spacer
What happens when interest rates hit the floor?
spacer
Director Penalty Notices (DPN)
spacer
Synchronised global economic slowdown
spacer
STP to be increasingly monitored
spacer
6 new accounting related videos
spacer
GDP by country since 1800
spacer
Information needed to be the BBQ expert.
spacer
Employee or independent contractor: What happens when it goes wrong?
spacer
Single Touch Payroll (STP) reporting irregularities: ATO contacting businesses
spacer
Employee entitlements, ‘wage theft’ and Fair Work: Why it’s time to be proactive
spacer
How's Australia really doing - the real figures?
spacer
Pension deeming rates cut from 1 July 2019
spacer
Audit warning sounded as ATO clamps down on dodgy claims
spacer
New ATO data-matching program – overseas movement data and HELP debt
spacer
ATO black economy strike force heads to Brisbane
spacer
Access to more resources and tools than most websites.
spacer
Tax Return Mistakes
spacer
SMSF advice appetite strong, says ASIC
spacer
Taxpayers confused by Scott Morrison’s $1,080 tax refund
spacer
Common STP set-up mistakes - ATO
spacer
Proposal to hold directors liable for GST set to pierce corporate veil
spacer
September 2019 - vital statistics for Australia
spacer
Tax Commissioner wants to turn black economy to ‘lighter shade of grey’
spacer
Changes to the Private Health Insurance Statement
spacer
Up to 9 in 10 ‘other’ expenses adjusted as ATO reveals dodgy claims
spacer
Downsizer Super Contribution
spacer
Tax payers to receive beefed up tax returns.
Article archive
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 3 of, 2018 archive
spacer
In case you missed it – The company tax Bill that did pass Parliament.
spacer
GST spotlight headed to smaller end of town
spacer
Superannuation Amnesty – Maybe! Maybe Not!
spacer
ATO drills in car-sharing focus this tax time
spacer
What is Bankruptcy?
spacer
Update of Australia's vital statistics
spacer
ATO speaks on risk factors, surveillance triggers for FY19
spacer
ATO’s corporate residency guidance cops backlash
spacer
ATO dispels top tax time myths to clients as clampdown rolls out
spacer
Tools for budgeting, cash flow, Super and more ….
spacer
Guidance for SMSFs on transfer balance reporting
spacer
ATO issues alert on super, tax scams
spacer
Salary sacrifice integrity
spacer
Understanding the evolution of blockchain and cryptocurrencies
spacer
Update to Australia's vital statistics
spacer
Tax Time Checklists- Individual, Company, Trust, Partnership and Super Funds
spacer
SMSFs - Our 'hardest' jobs
spacer
Tax Office reveals adventurous, dubious claims ahead of tax time
spacer
ATO reveals top tax time mistakes, set to contact 1 million taxpayers
spacer
Watch out for charges with incoming GST laws.
spacer
Super savings gap for women stuck at 30%
spacer
‘Wipe the slate clean’: Clients, accountants urged to use new amnesty period
spacer
Statistics for all Australians
ATO’s corporate residency guidance cops backlash

The tax office’s new approach to determining whether entities are resident under the central management and control test has drawn flak from industry bodies, noting technical issues with the guidance and disagreeing with the interpretation of the law.

       

 

Earlier, Taxation Ruling TR2018/5 was released in its final form, setting the Commissioner of Taxation’s position and the principles governing when a foreign incorporated company will be considered a resident in Australia for tax purposes.

The ruling sets out how to apply the central management and control test of corporate residency, with draft Practical Compliance Guideline PCG 2018/D3 also released to apply the principles set out in the ruling.

However, Chartered Accountants Australia and New Zealand, the Tax Institute, Corporate Tax Association, the Group of 100 and the Business Law Section of the Law Council of Australia have all raised concerns about the draft PCG, with the five bodies banding together to make a submission to the ATO.

Accordingly, the joint bodies disagree with the ATO’s expression of the corporate residency test, noting how it conflates with both the expression in the draft PCG and TR 2018/5.

“The Joint Bodies consider that the test is a two-limb test and that it should be expressed that way in both TR 2018/5 and the Draft PCG.

“The fact that a company has its central management and control in Australia does not necessarily mean it is carrying on business in Australia, although in some factual scenarios it is possible that the very activities of central management and control can be the carrying on of business in Australia.

“The Joint Bodies believe that the interpretation of the corporate residency test adopted by the ATO in both TR 2018/5 and the Draft PCG are incongruous with the policy objectives of the corporate residency test and create uncertainty.”

Further, it notes several technical issues with the draft PCG, including the fact that some foreign incorporated companies may inadvertently meet the residency test, potentially leading to double-taxation if they pay an unfranked dividend.

The joint bodies also note concern over the approach to which the different forms of communication articulated in the draft PCG might ultimate increase red tape and limit business efficiency.

“Distinguishing between video conference, circular resolutions, teleconference and physical presence will tend to create inefficiency and artificiality,” the submission said.

"It may promote situations where an Australian resident director is required to physically travel to the foreign board meeting to avoid central management and control being at least partly in Australia.

“Requiring a minority Australian resident director, or indeed, a number of Australian resident directors to travel overseas to attend board meetings to avoid having a substantial degree of central management and control in Australia is not consistent with a desire to limit ‘red tape’ and to promote business efficiency.”

The joint bodies believe further review of the corporate residency test by the Board of Taxation 12 months after carries “significant merit” and could potentially warrant legislative change.

 

 

Jotham Lian  
08 August 2018
accountantsdaily.com.au

© O'Brien and Partners 2011 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922