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  • Central management & control transitional relief extended

    We have extended the transitional compliance approach period in Practical Compliance Guideline PCG 2018/9 Central management and control test of residency: identifying where a company's central management and control is located for companies that are taking active and timely steps to change their governance arrangements.

    PCG 2018/9 provides practical guidance on how to apply our views set out in Taxation Ruling TR 2018/5 Income tax: central management and control test of residency.

    Our update to PCG 2018/9:

    • extends the transitional compliance approach period for companies that are taking active and timely steps to change their governance arrangements in line with the approach
    • confirms our transitional and ongoing compliance approaches on penalties for failing to lodge taxation documents
    • clarifies that Australian directors flying overseas to attend board meetings where the company has a substantive commercial presence is not considered an ‘artificial or contrived arrangement’
    • clarifies in the ongoing compliance approach that decisions undertaken by circular resolution are captured when it is considered whether a substantial majority of central management and control is exercised in a foreign jurisdiction
    • provides that tax residency for companies operating wholly offshore will often be regarded as ‘low risk’ due to permanent establishment or branch exemption rules.

    Additional examples are currently being considered for inclusion in the PCG and will be provided in a later update.

    See also:

    Last modified: 13 Dec 2019QC 60958