The Australian tax market has encountered various tax reforms and seen a number of long-awaited, and critically important, pieces of tax legislation introduced in the last year.
The 2016/2017 Australian Federal Budget contains numerous tax proposals including several inspired by the OECD's BEPS Project. These proposals focus particularly on multinational anti-avoidance, transfer pricing, anti-hybrid rules and thin capitalisation rules. Another key addition to Australian legislation from the last year is the diverted profits tax.
Three GST reform measures have been introduced which will impact cross-border transactions, specifically inbound supplies made from outside Australia which will be attributable starting on or after July 1 2017. Firstly, the GST will extend to cover inbound intangible supplies made by non-resident suppliers to Australian consumers. Secondly, by either remit GST or claim credits, the government will reduce the need for non-residents to register for GST in Australia as a result of business-to-business transactions which are ultimately revenue neutral. Thirdly, the extended GST will cover sales by non-resident and Australian suppliers of low-value goods (below AU$1,000 (US$771)) which are imported via parcel. This reform will particularly relevant for goods sold online from outside Australia.
Australia is one of the early adopters of the OECD's VAT guidelines on cross-border intangibles and services impacting cross-border transactions. The country's new rules will particularly impact non-resident companies making sales into Australia.
"New GST rules are expected to affect many businesses and consumers including both import and export as other countries are at the same time applying these new rules as well," said Jock McCormack of DLA Piper.
The new regime will be activated from July 1 2017. Tax practitioners expect this will bring about huge change in the international trade market in Australia, affecting many businesses, both importers and exporters, as well as consumers, as other countries bring in similar rules in line with Action 1.
In the Budget, the government also announced the establishment of a new taskforce by July 1 2018, to be known as the tax avoidance taskforce, within the Australian Taxation Office (ATO). It will target multinationals, large public and private groups and high net-worth individuals. The taskforce, which will employ more than 1,000 people, will be directly led by the commissioner of taxation, and is expected to collect more than AU$3.7 billion (US$2.9 billion) in tax.
Taxpayers are becoming more and more careful not to overlook state taxes. "Taxpayers, especially large and multinational entities, are increasingly involved in detailed discussions on their tax affairs with the ATO and other regulatory bodies," said Hugh Paynter of Herbert Smith Freehills. "What this means for the Australian tax market is that having both a high level of technical skill, and good relationships with senior ATO officers are paramount."
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|Interest paid by Australian branch of foreign bank to parent||5%||E|
|Corporate Income Tax||30%||A|
|Capital Gains Tax||30%||A|
|Net Operating Losses (years)|
|Fund payments from managed investment trusts||15%||H|
|Royalties from, for example, patents, know-how||30%||F|
|Branch Remittance Tax||0%|
A The rate is 28.5% for eligible small business entities with turnover of less than AUD2 million. For corporations, capital gains are taxed at the relevant corporate income tax rate.
B This is a final tax that is imposed on payments to non-residents only. A reduced rate (in recent treaties, reduced rates typically are 0%, 5% or 15%, depending on the level of ownership) applies to residents in treaty countries.
C An exemption from dividend withholding tax applies to the part of the unfranked dividends that is declared in the distribution statement to be conduit foreign income.
D In general, this is a final withholding tax that is imposed on payments to non-residents only. However, withholding tax is imposed in certain circumstances on interest paid to residents carrying on business overseas through a permanent establishment (branch). Modern Australian tax treaties exempt government and unrelated financial institutions from withholding tax.
E Interest paid by an Australian branch of a foreign bank to its parent is subject to a rate of 5% on the notional interest rate based on the London Interbank Offered Rate (LIBOR).
F Unilateral exemptions from interest withholding tax are provided for certain publicly offered debentures, for state and federal government bonds and for offshore borrowing by offshore banking units.
G In general, this is a final withholding tax that is imposed on gross royalties paid to nonresidents. A reduced rate (5% in recent
treaties) applies to residents of treaty countries.
H Effective from July 1 2012, managed investment trusts that hold only newly constructed energyefficient commercial buildings may be eligible for a 10% withholding tax rate.
Martin Fry is the tax practice leader at Allens, specialising in assisting both domestic and international corporations on an extensive array of taxation matters including M&A, corporate restructuring, cross-border transactions and debt, equity and hybrid securities. He is very highly regarded in the market by his peers as a leading tax lawyer in Australia.
The practice provides customised solutions to each client with services covering all areas of direct and indirect tax including income tax, corporate tax, international tax, investments and divestments, capital gains tax, GST, stamp duty, customs and excise, tax audit management and dispute and litigation resolution.
The firm's main clients are companies in banking and finance, the public sector, healthcare, industrials, infrastructure and transport, mining, oil and gas, real estate and TMT.
Arnold Bloch Leibler's tax practice comprises four partners and three associates. Mark Leibler is a senior partner and the head of the practice with more than 40 years of taxation experience and expertise in tax audits, corporate tax strategy and estate and trust planning.
The practice focuses on international taxation, transactional tax, audits and disputes, and trusts. Its client portfolio includes high net-worth individuals, start-ups, non-profit foundations, private funds, private equity and ASX200-listed corporations.
Peter McCullough leads Ashurst's tax team in Australia. McCullough has more than 25 years of experience in Australian and international tax matters. He has worked for state governments in dealing with privatisations and advising state-owned businesses.
McCullough has experienced advising on M&A, privatisations, infrastructure transactions, structured finance and capital market matters, private equity and fund structuring, international tax planning, group restructures and general corporate taxation issues.
Ashurst's tax professionals, with different specialisms, provide a wide range of tax services to various industries. The team comprises experts in finance, private equity, transfer pricing and cross border planning, investment funds, real estate taxation and dispute resolution.
Key clients for the practice come from the banking, construction, energy and resources, healthcare and life sciences, TMT and transport industries.
The national tax team of Baker & McKenzie boasts three partners and 15 legal staff members. John Walker heads its tax practice in Australia and also leads the tax practice for Asia Pacific. Walker has a good reputation for his advice on financial services as well as solid presence in the funds and cross border investment.
Jun Au, Jasmine Gharib, Alexandra Stead all joined the team as associates in the 2015 and Thomas Brennan joined in 2016 as senior economist.
The firm's tax practice focuses on advising multinationals on all aspects of tax on corporate, financial and commercial transactions, in addition to providing wide-ranging tax strategy advice. The team also offers tax services including income tax, transfer pricing, stamp duty, GST, employment taxes, group restructurings, structured financial products, private wealth management, property transactions and real estate investment trusts.
Key industries for the firm are computers, software and digital services, TMT, energy and utilities, financial services, food, fast-moving consumer goods (FMCG) and agriculture.
Theo Sakell is the leader of the tax group at Baker Tilly Pitcher Partners. He has more than 20 years of experience advising medium- to large-sized private and public listed corporations in diverse industries including aged care, education, healthcare, private equity, property development and retail. He was recognised for handling international tax such as cross-border transactions and global structuring.
The team has 25 partners and 100 professionals in Australia providing effective and efficient tax management. The firm has strong relationships with the tax authorities resulting in good communications during tax audits and disputes.
Andrew Sommer heads the tax and transfer pricing practices at Clayton Utz. The tax practice has six partners and 23 professionals covering diverse areas of taxation. The firm hired David Wong as a lawyer in February 2016.
Sommer is an indirect tax specialist, with particular expertise in complicated GST issues. He is a member of ATO's indirect tax rulings panel.
The team's advice covers areas including fund management, private equity, structured products, international structures and transfer pricing. The practice regularly advises on income tax, capital gains tax, withholding and fringe benefits tax (FBT), stamp duty, GST and further related direct and indirect taxes.
Industry-wise, the firm's key sectors are financial services, energy and resources, transport and logistics, construction and major projects and TMT.
The tax team worked on Macquarie Group's acquisition of ANZ's Esanda motor vehicle loan portfolio for $6.17 billion. The firm's role included advising on the income tax, stamp duty and GST implications of the transaction. This deal was important as it allowed Macquarie to double the size of its motor vehicle finance operations in Australia.
Corrs Chambers Westgarth, Taxand Australia's tax practice is led by Craig Milner, who was praised for extensive experience in income tax and GST. The practice has two partners and six other professionals.
The firm advises multinationals and local companies on a variety of transactions including M&A, demergers, initial public offerings and other capital markets transactions, private equity, cross border investment and more. The firm's clientele is mainly composed of energy, resources, real estate, infrastructure, FMCG and financial services.
In December 2015, the tax team acted for a leading company in the construction sector and a world-leading private equity investor in real estate regarding an indirect tax matter. The clients were co-owners of a Sydney address.
One client said: "We have a long-established relationship with the Corrs tax team. Strong indirect taxes focus. Excellent, reliable service delivery. Good value for money. Practical and user friendly advice."
Deloitte's tax services practice consists of 102 partners and 532 fee earners. It is led by Brett Todd, who also became the firm's managing partner in September 2015. He is experienced in dealing with complicated M&A transactions.
The firm offers a broad range of integrated tax services to domestic and international clients, including business tax, international tax, transfer pricing, M&A transactions, indirect tax, tax management consulting, global employer services and business process solutions.
Deloitte provides various tax technology products, focusing on innovative solutions in a wide range of areas of taxation. The tax team helps clients to gain greater levels of insight through a combination of analytics and digitisation, improving efficiency and productivity and focusing on more strategic tax issues relevant to the Australian tax market. The firm's digital tools allow clients to be more aware of the latest tax developments.
DLA Piper's tax practice comprises three partners, one partner-level consultant and more than 10 lawyers. Jock McCormack, a leading partner in corporate and international tax, is head of the national tax division of the firm. Melissa Lim and Michael Yunan joined the firm from Deloitte during the past year.
McCormack is chairman of the tax committee of Infrastructure Partnerships Australia, a committee member, treasurer of the International Fiscal Association and part of national tax committee of the Property Council of Australia. He works closely with these organisations in submissions and representations concerning tax developments and reforms.
DLA Piper offers a comprehensive tax service for businesses operating in Australia and across the global markets, providing specialist advice on corporate tax law and business related matters. The firm offers a full service in corporate tax, real estate, employment, finance, intellectual property, and restructuring.
In one recent deal, McCormack, partner Matthew Cridland and senior associate Eddie Ahn advised on structuring and related planning for the establishment of three new managed investment trusts holding Australian real estate for Korean institutional investors. The team secured positive rulings under the foreign collective investment vehicles test and secured a positive ruling on Division 250 which deals with tax exempt asset financing.
Paul Doralt is the head of tax at Dorda Brugger Jordis and joined the firm more than 10 years ago. His key areas of practice are taxation, M&A, structured finance, and trust and estates. The team of three professionals also provides advice in the fields of international tax planning and tax litigation.
Apart from Doralt, the team consists of Martina Znidaric, a senior associate with a CPA and tax adviser qualification, and Katharina Binder, a senior associate with a New York Bar qualification.
EY's large and comprehensive tax practice is overseen by Craig Robson. The firm hired six professionals in the past year including Richard Buchanan from Greenwood & Herbert Smith Freehills and Sean Keegan from PwC.
The firm's tax service aims to ensure compliance and maintain balance in today's changing tax landscape. The team assists clients with international compliance and reporting, building tax-effective supply chains and managing mobile workforce risks.
The firm provides comprehensive services to numerous industries including agriculture, automotive and transportation, consumer products, financial services, life sciences and media and entertainment.
Mark Azzopardi is the managing partner and head of Grant Thornton's tax practice. He has 20 years of experience in tax advisory and compliance works. His areas of expertise include M&A, tax due diligence reviews, restructuring, transfer pricing reviews, joint venture arrangements, IPOs and more.
The firm's tax practice provides full range of tax services including corporate tax, employee share schemes, GST and indirect taxes, international tax, transactional tax and tax compliance. It also provides advice about ATO audits and reviews and transfer pricing.
Greenwoods & Herbert Smith Freehills and Herbert Smith Freehills (HSF) together provide integrated advisory services across all areas of commercial tax. Tony Frost is the managing director of Greenwoods and Hugh Paynter is a partner leading the commercial litigation and dispute resolution team of HSF. Greenwoods is a specialist tax advisory firm while HSF is a commercial law firm.
Greenwoods comprises 18 partners, known within the firm as directors, and 28 other professionals. HSF boasts nine partners and 15 specialists in the practice. Greenwoods and HSF hired 12 new members to the team in the past year mostly from Big 4 accounting firms. Aldrin De Zilva, who was previously head of Deloitte Lawyers in Australia, joined Greenwoods as a senior director to run its Melbourne office.
Greenwoods and HSF offer advice and services on a wide spectrum of taxation issues, with particular focus on income and capital gains tax, tax avoidance, international tax, goods and services tax, stamp duty, employment tax issues, charitable and not-for-profit organisations, and tax investigations and disputes.
Key clients of the firm include Lend Lease, Investa, Alinta Energy, Gateway Lifestyle, DEXUS, Frasers Property Group, Westfield/Scentre Group, Commonwealth Bank of Australia, and Mirvac.
In February 2016, the tax practice team completed a sale of the Investa Property Group to Chinese sovereign wealth fund China Investment Corporation (CIC), which valued approximately $2.13 billion. The sale of Investa was one the largest real estate transactions to occur in 2015 and 2016. Advising on this transaction involved consideration of multiple parties at each stage of the transaction and multiple negotiations for different stages occurring at the same time.
Greg Reinhardt leads Henry Davis York's tax team, which employs three other professionals. Reinhardt is particularly experienced in advising on financial services including managed investment funds, derivative markets, insolvency and restructuring. The firm hired Lisa Galpin as senior consultant from PwC this year.
The tax practice's major clients comprise public and private companies, foreign corporations and banks, which it advises on the implications of M&A, disposals, corporate insolvencies and restructurings, property and infrastructure developments, financing and leasing arrangements, tax consolidation and the establishment of new businesses.
Other key industries that the firm advises on include financial services, transportation, energy and utilities, manufacturing, pharmaceuticals, TMT and software and online.
The firm advised on the fringe benefit tax (FBT) implications associated with the issuing of travel passes for employees of New South Wales (NSW) transport agencies for free unlimited travel on the NSW public transport network. The team was required to advise, in particular on the valuation of any fringe benefit provided to employees and the relevant statutory authority liability to FBT.
Richard Gelski is the key partner at Johnson Winter & Slattery's tax practice and has more than 40 years of experience in the fields of taxation. He is a former president of the Taxation Institute of Australia. He specialises in corporate structuring, cross-border investments, tax-effective financing, capital raising, M&A, property trust structures and more.
The practice provides tax advice on corporate tax and deals with the tax authorities during tax audits and disputes.
The main sectors the team works for are agriculture, consumer goods, electricity, infrastructure, aviation and transport, financial services, private equity and venture capital.
King & Wood Mallesons is one of the top law firms in Australia, providing a complete and high-quality tax service. The tax professionals at the firm have both legal capability and an extensive experience in tax across different industries. Consequently they are able to identify and provide practical solutions in consideration of clients' business and commercial needs.
Justin Cherrington is the head of the national tax team and the global practice coordinator for taxation for the King & Wood Mallesons network. He is involved in a wide variety of tax work including corporate tax, M&A, international tax and restructuring. His key practice areas are banking and finance, real estate, energy and utilities, telecommunications and digital commerce.
The tax specialists' expertise includes corporate tax, indirect tax, transfer pricing and supply chain tax, pensions and superannuation, employment tax and incentives, tax planning, private client and wealth planning, real estate, fund structuring and tax disputes.
David Linke is the national managing partner of KPMG Australia's tax practice, supported by 81 other partners and 551 other fee earners. The practice has employed several new staff in the past year, including Dharma Chandran, Tim Nice, Len Nicita and Sarah Blakelock, who are all renowned advisers in their respective fields.
KPMG's tax offering covers the full range of sectors, providing both a strategic and operational-level of tax advice. The tax team also advises on risk-related matters and ATO dispute resolution expertise. The top five industries KPMG Australia advises companies from are financial services, technology, media and telecommunications (TMT), computers, online and digital services, transport and logistics, and automotive.
The tax practice has been making investments in technology and data analytics to deliver high quality compliance services and utilise data analytics to identify risks and add value for clients.
McCullough Robertson is an independent Australian law firm providing a broad range of tax services across the manifold industries. Its core tax services include corporate tax, property and transactions, private client and small to medium enterprises, and tax audits and dispute resolution.
Damien Clarke is a tax law expert representing clients in international tax, M&A, resources law, stamp duty, capital gains tax, foreign investment and corporate restructuring. The core professionals of the practice include six partners and a consultant.
MinterEllison's tax team offers innovative and pragmatic solutions to tax challenges including corporate income tax, international tax, employment tax, financial service tax, resource tax, stamp duty and state tax, tax controversy, tax due diligence and tax compliance.
William Thompson is the managing partner and the regional market leader of the tax practice, and has expertise in corporate tax and tax disputes. He also has in-depth experience in commercial contracting and climate change issues. Rhys Guild is the national GST leader and is also experienced in assisting clients regarding audits and disputes. His expertise covers the financial services, property and construction, energy, telecommunications and government sectors.
Norton Rose Fulbright's tax practice offers a wide spectrum of services including international tax, income tax, indirect tax, capital gains tax, fringe benefits tax, payroll tax, and customs and excise for diverse industries like financial services, energy, infrastructure, mining and commodities, transport, technology and life sciences.
Tax lawyer Wayne Spanner is the managing partner of the Australian tax practice and is an experienced and skilled litigator. He offers advice on high-end fund and financial services, real estate, remuneration and benefits and taxation services and his strongest area of expertise is the financial sector.
The team was strengthened in the past year by the addition of a partner from Baker & McKenzie, one of the remarkable tax experts in the nation, Ellen Thomas. She focuses on M&A transactions, corporate restructures and international tax planning as well as tax audits and dispute resolution.
Tom Seymour is the managing partner of PwC's Australian tax and legal services. He is the head of tax in PwC's east cluster leadership team covering the Asia-Pacific region and is also part of the PwC global tax leadership team.
Seymour has particular expertise in tax consolidation, uniform capital allowance, tax optimisation for capital concentrated industries, international tax, tax effective ownership structures, disposals and acquisitions.
The tax team, which comprises financial and tax specialists including economists, focuses on understanding the evolving tax landscape to meet compliance obligations, adjust to regulatory modifications and identify and reduce tax risks.
PwC provides advisory services on corporate tax, global tax, GST, international tax, stamp duty, tax controversy, tax reporting and strategy, and transfer pricing.
|Tier 1 - Australia|
|Greenwoods & Herbert Smith Freehills and Herbert Smith Freehills|
|King & Wood Mallesons|
|Tier 2 - Australia|
|Tier 3 - Australia|
|Arnold Bloch Leibler|
|Baker & McKenzie|
|Corrs Chambers Westgarth, Taxand Australia|
|Norton Rose Fulbright|
|Tier 4 - Australia|
|Baker Tilly Pitcher Partners|
|Henry Davis York|
|Johnson Winter & Slattery|