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Edited version of private ruling
Authorisation Number: 1011716018915
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fac sheet has more information.
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Ruling
Subject: New Tax File Number and Australian Business Number - assets transfer to ultimate holding company
Question 1
Is the Australian branch of a U.S. entity required to apply for a new Tax File Number (TFN), or can the branch continue to operate under its existing registration when the Australian assets and liabilities of the Australian branch are transferred to the ultimate holding company?
Answer
The Australian branch is not required to obtain a new TFN as a result of the transfer of the Australian assets and liabilities to the ultimate holding company.
Question 2
Is the Australian branch of a U.S. entity required to apply for a new Australian Business Number (ABN), or can the branch continue to operate under its existing registration when the Australian assets and liabilities of the Australian branch are transferred to the ultimate holding company?
Answer
The Australian branch is not required to obtain a new ABN as a result of the transfer of the Australian assets and liabilities to the ultimate holding company.
This ruling applies for the following period:
31/12/2010 to 01/07/2011
The scheme commences on:
31/12/2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
A US resident company has an Australian branch (permanent establishment) that lodges income tax returns in Australia.
Shares in the Australian branch are owned by a US company (the immediate holding company).
The immediate holding company is wholly owned by the US ultimate parent company.
It is proposed to transfer the Australian assets and liabilities of the Australian branch to the ultimate holding company.
There will be no change in the ultimate ownership of the Australian Branch.
The business will continue to be run and operate by the Australian branch in Australia after the transfer of assets.
Relevant legislative provisions
International Taxation Agreements Act 1953 Article 5(2)(b) of Schedule 2 (the USA Convention)
Income Tax Assessment Act 1936 section 202B
A New Tax System (Australian Business Number) Act 1999 section 8(1)
A New Tax System (Australian Business Number) Act 1999 section 18(1)
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Question 1
Summary
The Australian branch is not required to obtain a new TFN as a result of the transfer of the Australian assets and liabilities to the ultimate holding company.
Detailed reasoning
Article 5(2)(b) of Schedule 2 (the USA Convention) of the International Taxation Agreements Act 1953 defines that a "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on and includes a branch.
Article 7 deems that the profits attributable to the permanent establishment in Australia are to be taxed in Australia.
As a result an income tax return is required to be lodged in Australia and therefore a TFN is required.
As you have advised that the permanent establishment will continue to operate and trade in Australia after the transfer of its assets and liabilities to the ultimate holding company there is no need to obtain a new TFN. The branch, or permanent establishment, still continues to exist.
A new application for a TFN in accordance with section 202B of the Income Tax Assessment Act 1997 would only be required where the permanent establishment ceased to trade under the current structure and trades under a new structure and name.
You will be required to note any necessary changes to immediate holding company and ultimate holding company details on your income tax return.
Question 2
Summary
The Australian branch is not required to obtain a new ABN as a result of the transfer of the Australian assets and liabilities to the ultimate holding company.
Detailed reasoning
Section 8(1) of the A New Tax System (Australian Business Number) Act 1999 (the ABN Act) states that you are entitled to an ABN if
(a) you are carrying on an enterprise in Australia; or
(b) in the course or furtherance of carrying on an enterprise, you make supplies that are connected with Australia.
Further, section 18(1) of the ABN Act states that the Registrar may cancel your registration in the Australian Business Registrar if it is satisfied that
· you are registered under an identity that is not your true identity; or
· at the time you were registered, you were not entitled to have an ABN; or
· you are no longer entitled to have an ABN.
Where you cease to carry on an enterprise in Australia then you do not meet the registration requirements as contained in section 8 of the ABN Act and therefore you are no longer entitled to have an ABN.
As you have advised that the Australian branch will continue to operate and trade in Australia after the transfer of its assets and liabilities to the ultimate holding company there is no need to obtain a new ABN. The branch still continues to exist. Further, as it is still carrying on an enterprise in Australia it is entitled to its ABN under section 8(1) of the ABN Act.
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