An overseas incorporated company may still be an Australian tax resident
A company that is incorporated in Australia will be a resident for tax purposes and accordingly its total world-wide income will be taxable in Australia. [Note: only Australian sourced income of a non-resident company will be taxable in Australia).
A recent court decision (Bywater Investments and Hua Wang Bank) confirmed that even a company that was incorporated overseas would still be an Australian tax resident if the company carried on business and had their central management and control (CM&C) in Australia.
Generally, a company’s CM&C will be where the proper governance of the company takes place (i.e. the place where board meetings are held and the directors can make real decisions to act in the best interest of the company – as opposed to directors only acting as mere “rubber stamps” for decisions already made).
Companies that carry on a business in Australia and that have their proper CM&C in Australia will therefore be a tax resident of Australia – even if the company may have been incorporated in a foreign country.
Health care practitioners and lump sum payments
The ATO is focusing on the correct tax treatment of lumpsum payments received by healthcare practitioners (e.g. doctors, dentists, physical therapists, radiologists or pharmacists) from third party healthcare centre operators.
Basically such third party healthcare centre operators provide fully equipped consulting rooms, administrative services, clerical staff and facilities necessary for healthcare practitioners so that they can provide healthcare services to patients. There is no partnership or employment arrangement between these operators and the practitioners – however, the practitioners are paid a lumpsum as consideration for working for the operators for an agreed minimum period of time and minimum weekly working hours.
According to the ATO, such lumpsum receipts would be ordinary income (as opposed to capital gains).
Please contact your Nexia Edwards Marshall NT advisor if you are a healthcare practitioner who has been providing healthcare services to such a healthcare centre so that we can ensure your receipts are treated correctly for tax purposes.
Building and construction businesses and overdue taxable payments annual reports
As mentioned in an earlier Top Tax Tips, taxpayers operating in the building and construction industry had until 29 August 2016 to lodge their taxable payments annual reports (i.e. reports that detail the total payments made to contractors during the year ended 30 June 2016) with the ATO.
If you failed to lodge your taxable payments annual report by the due date, please contact us so that we can lodge the annual report on your behalf as soon as possible as well as negotiate a remission of penalties with the ATO.
If you have received a final reminder letter from the ATO, please note that lodgement will be due 21 days from the date of issue of the letter.
How can Nexia Edwards Marshall NT help you?
For any questions or to discuss any of the above in relation to your personal situation, please contact Sarah McEachern or your Nexia Edwards Marshall Advisor.