Doing something overseas – Have you understood the practical Australian taxation consequences correctly?

The tax strategies and structures adopted by multinational
organisations are currently under enormous (and very public) scrutiny from
global tax authorities and the media.

In Australia alone, hardly a week goes by without a
newspaper article commenting on the tax profile of a corporate entity or the
“big end of town” as a concept.
Consistent with the Organisation for Economic Cooperation
and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) project
initiative, the Australian Government has introduced a number of new
legislative measures designed to reflect BEPS and the concerns raised around
international tax avoidance for large multinationals.

At the 51st Western Australia State Convention in August,
Mathew Chamberlain, CTA, (EY) will take a closer look at the issues in his
session ‘ Doing something overseas – Have you understood the practical
Australian taxation consequences correctly
Here we speak to Mathew and preview the paper to be presented
in Perth.
As Mathew’s paper notes, ‘The Australian Taxation Office
(ATO) has been empowered not only by the raft of recent and proposed
legislative changes. It has also been provided with substantial resourcing to
review multinationals affairs, and has had a number of recent high profile
‘wins’ both in the courts and as settlements with taxpayers. For most
Australian companies operating globally it is no longer a question of if but
when the ATO will come knocking at their door’.
“In my session in Perth, I’ll be looking at some of the
practical do’s and don’ts and the commercial pressure points for Australian
companies expanding and operating overseas – less on the technical and more on
the material and practical! There’s also quite a bit of case law and
legislation to address, including the definition of residence for a company,
various ATO rulings and determinations on residency, branches and CFCs plus
case law on tax residence.”

His paper notes that ‘Australian businesses looking to
invest or operate overseas need to ensure they implement structures that are
commercially viable, and are compliant with Australian and foreign tax
legislation. Australia’s tax system contains complex rules for Australian
businesses expanding offshore. These rules can often present difficulties for
tax advisers, particularly where they involve overlaying Australian tax
concepts on an international structure.’
Mathew said “Advisers in this space sometimes have too overt
a focus on the technical outcomes and issues and an inability to distinguish
between these technical issues and what actually really matters. Just because
you have a technical issue, doesn’t mean you necessarily have a practical issue
or an issue that can’t be managed relatively simply.”
Generally, Australian taxpayers establishing activities
overseas do so in one of two ways – either a local company or a branch of an
Australian or interposed company (i.e. a permanent establishment (PE)). The
focus of Mathew’s session and the paper he will present is to provide an
overview of the key Australian tax issues and current developments for each of
these options, and highlight issues which may be relevant to a potential
outbound investment by Australian businesses.
This session will focus on the key tax issues associated
with both structures. Mathew will cover some core issues and concepts around
foreign subsidiaries and tax residency, including tax residency and
implications of Australian tax residency, recent developments in cases and current
ATO review, as well as the impact of tax treaties.
He will then look at foreign branches and PE under
Australian tax law, tax treaties and OECD principles, the impact of the OECD
BEPS project, including the proposed multilateral instrument.

Finally, he will look at the issues in choosing which of the
two options to use.

Mathew’s session is one of seven in the Convention’s
dedicated corporate stream, with the session
‘The Post-BEPS World – Lessons
Learned’ by Mathew Popham, CTA, (KPMG) also taking place on day one of the
two-day program.

Other sessions look at the R&D tax incentive, capital
management and restructuring, tax issues for start-ups raising funds, and
related party financing.
This year’s Convention Keynote Address comes from The Hon.
Justice Davies (Federal Court), and the program opens with an interview-style
session with the Second Commissioner, Neil Olesen (ATO).
Join us at Crown Perth, 16–17 August 2018 for 51st Western
Australia State Convention. Find out more on our website.


See all

Follow Us