Doing business in Australia : a quick tax guide.

205 Pages·2013·0.738 MB·English

by  CCH New Zealand Limited,

Product Information
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National Library of New Zealand Cataloguing-in-Publication Data
CCH New Zealand Limited.
Doing business in Australia: a quick tax guide.
ISBN 978-1-77547-041-0
1. Commercial law—Australia. 2. Income tax—Accounting—Law and
legislation—Australia. 3. Taxation—Law and legislation—Australia. I.
Title.
346.9407—dc 23

ISBN 978-1-77547-041-0
© 2013 CCH New Zealand Limited
Published by CCH New Zealand Limited
Published September 2013
All rights reserved. No part of this work covered by copyright may be
reproduced or copied in any form or by any means (graphic, electronic
or mechanical, including photocopying, recording, recording taping, or
information retrieval systems) without the written permission of the
publisher.
Printed in New Zealand by Ligare Limited
Contents
Foreword
Although the New Zealand and Australian tax systems have a
common ancestry, and that one effect of business globalisation has
been one of standardising the broad concepts underpinning taxation
regimes across jurisdictional borders, the devil, without question, is in
the detail. It would be foolhardy for a New Zealand business person to
assume that, even given the comforting commonality of acronyms like
PAYG, FBT, GST and CFCs, tax in Australia is simply a replication of
tax in New Zealand. In fact, quite the opposite is true as many of the
differences are fundamental.
Furthermore, for closely-held/SME businesses seeking to expand into
Australia from New Zealand, any tax paid in Australia can result in a
disproportionate reduction of net funds able to be distributed to the
shareholders in New Zealand. Until such time as our respective
Governments agree on common recognition of tax credits trans-
Tasman, there is inevitably a risk of Australian-sourced income being
over-taxed, as compared to income derived solely in New Zealand.
Accordingly, careful tax planning early on in a trans-Tasman venture is
the best way to reduce exposure to this type of tax leakage. This may
be achieved through a mixture of structuring (using different types of
entitles): transfer pricing arrangements or careful management of
affairs to ensure no permanent establishment is created.
This book is designed to highlight many of the tax issues that can
arise in Australia for the New Zealand business or investor
contemplating crossing the “ditch”. It should raise some red flags for
those businesses and their accountants, and lead to better quality
discussions with specialist tax advisors on both sides of the Tasman.
Without question, this is an area where prevention is better than the
cure.
Scott Mason
Managing Principal NZ — Tax Advisory
Crowe Horwath Australia/New Zealand
CCH Acknowledgments
CCH New Zealand Limited wishes to thank the following who
contributed to and supported this publication:
Managing Director: Bas Kniphorst
General Manager: Julie Benton
Head of Content: Andrew Campbell
Product Manager: Dione Kimpton
Production Team Leader: Yeong Wai Heng
Production Editor: Gnaliny Tigarajan
Cover Designer: Envisage Design
AUSTRALIA
¶AUS ¶1-001 SNAPSHOT
Tax authority Australian Taxation Office
www.ato.gov.au
Tax year 1 July – 30 June
A taxpayer may apply to use a different tax year.
This application is normally granted where the
substituted tax year coincides with the tax year of
an overseas holding company. (AUS ¶1-016)
2013/14 Corporate tax rate — 30%
income tax
rates (AUS ¶1-
020)
Resident individuals:
Taxable income Tax rate
A$
0–18,200 Nil
18,201–37,000 19c for each A$1 over
18,200
37,001–80,000 A$3,572 plus 32.5c for
each A$1 over 37,000
80,001–180,000 A$17,547 plus 37c for
each A$1 over 80,000
180,000+ A$54,547 plus 45c for
each A$1 over 180,000
Non-resident individuals:
Taxable income Tax rate
A$
0–80,000 32.5c for each A$1
80,001–180,000 A$26,000 plus 37c for
each A$1 over 80,000
180,000+ A$63,000 plus 45c for
each A$1 over 180,000
VAT/GST 10% GST — basic food exempt (AUS ¶1-185)
Capital gains Taxable capital gains are calculated under special
tax (CGT) rules and included in a taxpayer’s assessable
income and taxed at the taxpayer’s applicable rate.
(AUS ¶1-060)
Losses Losses may be offset against all income received
in the same accounting period, carried forward
indefinitely and offset against future trading profits,
or carried back for up to two years and offset
against trading profits in those past years. (AUS
¶1-080)
Treaty network 44 treaties in effect (AUS ¶1-005)
Withholding
tax (non-
residents) Interest 10% (AUS ¶2-050(a))
Dividends 30% (AUS ¶2-050(b))
Royalties 30% (AUS ¶2-050(c))
Construction and
related activities 5% (AUS ¶2-020(b))
Gaming junkets 3% (AUS ¶2-020(b))
Entertainers 30% or applicable
individual rate (AUS ¶2-
020(b))
Technical fees 30% (AUS ¶1-005(a))
Group Under the tax consolidation regime, wholly-owned
consolidation Australian resident group companies can elect to
be treated as a single entity for tax purposes, with
the head company (ie representative of the group)
able to lodge a company tax return on behalf of the
whole group. (AUS ¶1-180)
CFC rules Yes (AUS ¶3-060)
Thin Yes — 3:1 debt/equity ratio (AUS ¶1-110(h))
capitalisation
restrictions
Currency Australian dollar — A$
Exchange No exchange control restrictions apply on the
controls inflow or outflow of funds to and from Australia.
¶AUS ¶1-003 GUIDE TO AUSTRALIAN CITATIONS
Authority Cited as
Federal legislation
A New Tax System (Goods and GST Act s <#>
Services Tax) Act 1999
A New Tax System (Goods and GST Regs reg <#>
Services Tax) Regulations 1999
Corporations Act 2001 Corporations Act s <#>
Corporations Regulations 2001 Corporations Regs reg <#>
Financial Transaction Reports FTRA s <#>
Act 1988
Foreign Acquisitions and FATA s <#>
Takeovers Act 1975
Fringe Benefits Tax Assessment FBTAA s <#>
Act 1986
Income Tax Assessment Act ITAA 1936 s <#>
1936
Income Tax Assessment Act ITAA 1997 s <#>
1997
Income Tax Rates Act 1986 Income Tax Rates Act s <#>
Income Tax (Transitional IT(TP)A 1997 s <#>
Provisions) Act 1997
International Tax Agreements Act International Tax Agreements Act
1953 s <#>
Tax Laws Amendment (Loss TLA (Loss Recoupment Rules
Recoupment Rules and Other and Other Measures) Act 2005 s
Measures) Act 2005 <#>
Taxation Administration Act 1953 TAA s <#>
Taxation Administration TAR reg <#>
Regulations 1976
Other legislation
Partnership Act 1892 (New South Partnership Act (NSW) s <#>
Wales)
Trustee Act 1925 (New South
Wales) Trustee Act (NSW) s <#>
Tax authority materials
Australian Taxation Office (ATO)
rulings, determinations and alerts Income Tax Ruling IT <#>
Interpretative Decision ID <#>
Practice Statement PS LA <#>
Taxation Determination TD <#>
Taxation Ruling TR <#>
Taxpayer Alert TA <#>
Cases
Australian Tax Cases (published <case name> <year> ATC <page
by CCH) or ¶>
Commonwealth Law Reports <case name> (year) <vol> CLR
(Australian) <page>
UK Law Reports (Appeal Courts <case name> (year) <vol>
(AC), King's Bench (KB), Queen's <reporter> <page>
Bench (QB))
¶AUS ¶1-005 TAX TREATIES — WITHHOLDING TAX
RATES
(a) Withholding tax rates
Australia has concluded tax treaties with a number of countries which
specify the withholding tax rates that apply. Non-treaty withholding tax
rates apply when they are lower than the rate specified in the treaty.
The following rates of Australian withholding tax apply to non-resident
entities:
Country Dividends Interest Royalties
% % %
Non-treaty 0/301 10 30
Treaty:
Argentina 10/152 0/103 10/154
Austria 0/151 10 10
Belgium 0/151 10 10
Canada 5/152 10 10
Chile 5/152 5/1025 5/1026
China 15 10 10
Czech Republic 5/155 10 10
Denmark 15 10 10
East Timor 15/306 10 10/306
Fiji 20 10 15
Finland 0/5/157 0/108 5
France 0/5/159 0/108 5
Germany 15 0/1010 10
Hungary 15 10 10
India 15 1011 10/1512
Indonesia 15 10 10/1513
Ireland 15 10 10
Italy 15 0/1010 10
Japan 0/5/1014 0/108 5
Kiribati 20 10 15
Korea, Republic of 15 0/1015 15
Malaysia 0/152 0/1015 15
Malta 15 1011 10
Mexico 0/1516 0/1015 10
Netherlands 15 10 10