With the Brisbane 2032 Olympic and Paralympic Games fast approaching, Queensland is increasingly attracting the attention of overseas businesses looking to establish a presence in Australia prior to the opening ceremony.

Whether it is a construction company bidding for infrastructure projects, a technology provider supporting major events, or a professional services firm following its clients into the market, Australia presents significant opportunities. However, businesses expanding into Australia should be aware that Australian tax obligations can arise sooner than many expect. Without appropriate planning and advice, significant and unexpected liabilities can arise – leaving a nasty sunburn!

Coming to Australia – how much should we pack?

One of the first questions overseas businesses should consider before coming to Australia is whether their activities create a permanent establishment (PE) here. Common triggers for Australian PEs include where a business has a fixed place of business in Australia, or where employees have “boots on the ground”. If a PE exists, Australia may have taxing rights over profits attributable to the Australian operations – this can get complicated quickly.

An alternative to a PE is to establish an Australian subsidiary entity. Pilot Partners regularly assists businesses coming to Australia with their structuring considerations, to find the most appropriate structure for their group.  Our focus is on ensuring that the corporate structure achieves an optimal global tax outcome for the group, whilst minimising tax risks.

Employment tax headaches – sunscreen required!

Employment tax obligations are commonly misunderstood and present a major risk area for foreign businesses coming to Australia. These obligations can include PAYG withholding, Fringe Benefits Tax (FBT), superannuation, payroll tax and workers compensation requirements.

If handled incorrectly, Company Directors can be made personally liable for a number of employment-related obligations.

Goods and Services Tax (GST)

Businesses making supplies connected with Australia may be required to register for and remit GST to the Australian Taxation Office (ATO). Even businesses located offshore can have GST obligations in Australia, particularly in relation to sales made to Australian consumers.

Data, Data, Data – more than just an arrival card

For larger groups, Australia has significantly increased its international tax reporting requirements in recent years. Large global businesses may be required to undertake annual Country-by-Country (CbC) reporting with the ATO. In addition, certain multinational groups are now subject to Australia’s enhanced public CbC reporting regime. This means that information regarding revenues, profits, tax paid, structures and activities may become publicly available for affected groups.

Similarly, the introduction of the OECD’s Pillar Two global minimum tax rules has added a further layer of complexity for large businesses. While these rules generally affect large multinational groups, compliance often requires significant planning, data collection and modelling before reporting deadlines arise.

Further, international related-party dealings remain a key area of focus for the ATO. Businesses transacting with foreign related-parties may be required to disclose the nature of these dealings to the ATO, together with the extent of appropriate transfer pricing documentation held in respect of the transactions.

Considerations for individuals

The cross-border considerations don’t end with the business itself. Individuals coming to Australia for an extended period of time should consider their own tax residency status. For those executives and tourists who choose to put down roots in South-East Queensland, becoming a tax resident of Australia will have implications for their foreign assets and income streams – which will be brought into the Australian tax net from the time their tax residency commences. Proactive planning leads to the smoothest transitions in these cases.

How Pilot can help

The arrival of the Olympics in Brisbane presents a huge business and investment opportunity. Early tax and structuring advice can help avoid costly surprises and ensure that opportunities are not overshadowed by compliance issues.

Pilot Partners’ Taxation Advisory team has a long history of assisting in-bound and out-bound businesses, their executives, and family groups understand and comply with their cross border taxation obligations in Australia.

Contact Pilot

For further information or assistance with cross-border tax matters, contact Tom Howard on thoward@pilotpartners.com.au or your Pilot Advisor on (07) 3023 1300.