Corporate Tax Residency Rules Reviewing

The Board of Taxation is, at the request of the Treasurer, reviewing the operation of Australia’s corporate tax residency rules. The purpose of the review is to ensure that the corporate tax residency rules are operating appropriately in light of modern, international and commercial board practices and international tax integrity rules.

The terms of reference set out by the Treasurer are for the Board to consider whether the existing rules:

• Minimise commercial uncertainty and ambiguity; Are consistent and aligned with modern-day corporate board practices;
• Protect the tax system against multinational profit shifting; and
• Otherwise, support Australia’s tax integrity rules as they apply to multinational corporations.

The Board of Taxation has already commenced consultation to initiate the first part of its review for stakeholder consideration. A Consultation Paper was published on the Board’s webpage on 6 September 2019 setting out observations on the current corporate residency rules, and posing questions about the ongoing viability of these rules.

The Group of 100 (G100) is assisting the Board of Taxation with the corporate tax residency review and the G100 Tax reform Working Group has been forwarded the information earlier this month.

The Board is seeking feedback from businesses and tax professionals on the corporate residency rules. The feedback will assist in understanding how the rules interact with current board practices and will help the Board make practical recommendations to modernise the rules. 

The Board of Taxation will be holding roundtable consultations in Sydney, Melbourne and Perth over the coming weeks, and is accepting written submissions until 4 October 2019.