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taxInsight INTERNATIONAL from taxInsight

Increasing Tax Office scrutiny on international transactions

In recent times, there have been a number of enquiries into what the OECD calls Base Erosion and Profit Shifting (BEPS).  Internationally, there is concern about multi-national companies using techniques such as arranging funding in low tax countries and charging high interest to their subsidiaries in high tax countries (called Base Erosion) or, through pricing mechanisms, arranging profits to be shifted from high tax countries to low tax countries (Profit Shifting). The OECD is examining this with a view to encouraging member countries to introduce legislation aimed at limiting the resulting adverse revenue effects but despite some years of effort, […]

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Substituted Australian accounting period

The overseas, controlling owners of an Australian company may want to apply to change the 30 June balance date for the Australian company to line up with the home country balance date.  For example, the Australian subsidiary of a UK parent company could apply to change the balance date to 31 March to assist with UK reporting requirements. There is a Tax Office form called Application for Substituted Accounting Period (SAP) NAT5087. Also, the Tax Office has published a practice statement for its staff to follow in assessing an application: PSLA 2007/21 Substitute Accounting Periods (SAPs). The application should be […]

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Do you need an APEC Business Travel Card?

The Asia-Pacific Economic Cooperation consists of 29 Asian and Pacific countries who have established cooperative arrangements to promote trade and business.  These include Australia, Brunei, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Singapore, Taipei, Thailand, Vietnam and Russia.  Canada and United States are also members. If you are the head of a business entity or the owner or director of a registered business or a nominated employee of that business, you may be eligible to apply for an APEC Business Travel Card.  If you are a senior government official, you might also […]

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New Rules for Foreigners buying New Zealand Property

On 16 May, the New Zealand Finance Minister announced that from 1 October 2015, gains on residential property in New Zealand sold within two years of purchase will be subject to a new “bright  line” test, which will be introduced in respect of residential property. There will be a rebuttable  presumption that if you sell property within two years of buying it, you did it to make a profit.  This  means that you are presumed not to hold it on capital account.  Instead you hold it in the nature of   trading stock and therefore any profit is fully taxable.  There will be only narrow grounds for rebuttal. Non-resident buyers must have a New Zealand bank account and Inland Revenue tax identification  number.  They also must disclose their tax identification number from their home country. Exceptions to the bright line test are: The property is the seller’s main home The property was inherited from a deceased estate or The acquisition was pursuant to a relationship property settlement The New Zealand Government will investigate introducing a withholding tax for non­-residents selling  residential property from mid ­2016.

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Revenue Authorities focus of taxing offshore income

The Tax Office launched a voluntary disclosure program which was called “Project DO IT” (disclose offshore income today) on 27 March, 2014. Errant taxpayers had until 19 December 2014 to come forward with details of untaxed offshore income and assets. Those who did were subjected to tax going back only four years and had their penalties reduced to 10%. This was announced as a precursor to more aggressive action by the Tax Office whose efforts are being bolstered by improved information sharing arrangements with an increasing number of countries. Many countries who relied on secrecy to attract investments and trade […]

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New Significant Investor Visa available

The previous Federal Government introduced a new Significant Investor Visa which targeted migrants who could make an investment of at least $5 million in the Australian economy. This was thought to make it easier for investors coming to Australia. Under this program investors would not have to meet a points test and had reduced residency requirements. Investments could be made in State and Territory bonds, ASIC regulated managed funds and direct investments into Australian companies. During the period from inception on 24 December, 2012 and 31 March, 2015 a total of 1,679 applications under this program have been lodged and […]

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GST on imported goods and services

Since its introduction in July 2000, GST has been applied to imported goods over $1,000 in value but not necessarily on imported services. The Treasurer has indicated that he will introduce legislation to apply GST to intangible supplies provided by offshore companies into Australia.  These supplies could include media services and all other services which are charged by offshore companies but which benefit Australians. Mr Hockey said that these integrity measures were related to an OECD consensus – that GST should be charged at the source, so a company providing intangible services into Australia, such as media services, should charge […]

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New UK tax to hit non-UK companies and groups

Commencing from 1 April 2015, HM Revenue & Customs (the UK Tax Office, referred to as HMRC) will levy a Diverted Profits Tax (DPT).  This is intended to counteract diversion of profits from the UK.  It will be levied on companies that seek to avoid setting up a permanent establishment in the UK or that use arrangements or entities which lack economic substance. Hence: If: a non-UK company arranges for a company to carry on an activity in the UK for the supply of goods, services or other property, and doesn’t create a permanent establishment in the UK, and this […]

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Pressure on tax evasion using Switzerland

On 3 March 2015, the Treasurer announced that Australia and Switzerland had agreed to increase cooperation in order to tackle tax evasion. The Tax Office will automatically receive details of financial accounts such as investment income and balances that Australians hold in Switzerland, and use it to check against the income declared in their Australian Tax Returns.  The Swiss Federal Tax Administration will receive details of Swiss residents that hold financial accounts in Australia. This information will be on the basis of the OECDs Common Reporting Standard (CRS) and will be implemented from 2017 with the first exchange information in […]

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Do we need a ‘Google Tax’?

Recently, there has been considerable discussion about the level of taxes being paid in Australia by large overseas multinationals.  A Senate Committee is currently examining executives of companies such as Apple and Google who acknowledge very substantial revenue earnings in Australia, but stress they are fully compliant with current Australian tax law. Concern is being voiced about very high revenue earnings but low reported net profits and taxes. The Treasurer has stated that multinationals should pay tax where their income is earned.  He said that there would be more about this in the 2015 Federal Budget. Should a special tax […]

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