Corporate tax 2023

Corporate tax residency

Source: The Tax Specialist Journal Article

Published Date: 1 Apr 2023


Australia's nonagenarian statutory rules for corporate residency are not fit for purpose and are in dire need of the reform recommended by the Board of Taxation in 2019. This article is concerned with residency of companies incorporated in foreign jurisdictions. Residency defines the jurisdiction of Australia's tax regime. The High Court's decision in Bywater means that a company incorporated in a foreign jurisdiction whose "central management and control" (CMC) is exercised in Australia will be an Australian resident because a company carries on business wherever its CMC is located. CMC is concerned with the high-level decision-making commonly undertaken by directors. It creates uncertainty where directors participate in decision-making while located in Australia. It discourages the appointment of Australian residents as directors of foreign companies. The ATO's lenient administrative attitude to the issue is to be commended, but the importance of the issue calls for a legislative fix.

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Corporate tax 2023

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