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Corporate tax residency
Published on 01 Apr 23 by "THE TAX SPECIALIST" JOURNAL ARTICLE
Australia’s nonagenarian statutory rules for corporate residency are not fit for purpose and are in dire need of the reform recommended by the Board of Taxation in 2019. This article is concerned with residency of companies incorporated in foreign jurisdictions. Residency defines the jurisdiction of Australia’s tax regime. The High Court’s decision in Bywater means that a company incorporated in a foreign jurisdiction whose “central management and control” (CMC) is exercised in Australia will be an Australian resident because a company carries on business wherever its CMC is located. CMC is concerned with the high-level decision-making commonly undertaken by directors. It creates uncertainty where directors participate in decision-making while located in Australia. It discourages the appointment of Australian residents as directors of foreign companies. The ATO’s lenient administrative attitude to the issue is to be commended, but the importance of the issue calls for a legislative fix.
Author profiles
Christopher Peadon FTI
Chris Peadon, FTI, is a Barrister at New Chambers specialising in tax. - Current at 20 June 2025
Annabel Burnett
Annabel Burnett graduated from the University of New South Wales with first class honours in law and economics in 2021. Annabel completed a clerkship at King & Wood Mallesons in 2020-21 and is currently working as a Tipstaff in the Equity Division of the Supreme Court of New South Wales. - Current at 13 October 2022
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