There have been three main domestic issues impacting Australia's tax field: the reinvention of the Australian Tax Authority (ATO), the ATO's concerns about business organisation and infrastructure-related tax issues in Australia and the removal of the GST exemption for low-value imported goods.
The reinvention of the ATO is due to its increased resources from the Australian government, which have enabled it to enhance its ability to analyse complicated domestic and international information. This information is obtained to ensure greater compliance by taxpayers and to determine any risks.
In addition to this, the ATO is taking a stricter approach to collecting tax revenues. Its new approach has led to more tax litigation in the courts, where it has had plenty of success. In 2016, it won cases against a number of MNEs including Cable & Wireless and Tech Mahindra. In the previous year, the ATO won a landmark case against Chevron. In the Chevron matter, Chevron made an appeal that was rejected by the Australian Federal Court in April 2017. Chevron withdrew a further appeal of the ruling, settling the case for A$340 million ($259 million).
The ATO's concerns about business organisation and infrastructure-related tax issues were highlighted in two documents released in January 2017. The first document, on fragmentation, was the Taxpayer Alert TA 2017/1 (the Alert). The Alert addresses the range of arrangements used by businesses. The ATO takes the position that these arrangements fragment integrated trading business into separate businesses, leading to a more favourable tax outcome for investors. Further guidance will be issued, but the ATO has not said when.
The second document released by the ATO is the updated draft of its Privatisation and Infrastructure – Australian Federal Tax Framework (the Draft Framework). The Draft Framework states the ATO's positions on infrastructure tax. It also states how it expects the law to be applied to business structures, particularly in relation to privatisation. It is non-binding, but ATO officials are expected to adhere to the views set out within it. The Draft Framework comprises four chapters: construction of social infrastructure, particularly focusing on public-private partnerships; privatisation of government businesses into staple groups; other infrastructure-related issues; and areas of ATO compliance focus.
There are concerns that the non-binding aspect of the Draft Framework means that the ATO will be able to do U-turns on its approach or search for other concerns in the structures. This is liable to leave a taxpayer exposed to unknown tax issues. There is a potential risk that the ATO will overreach its remit due to its focus on collecting the right amount as opposed to a reasoned application of the law.
Regarding GST, the Australian Parliament has passed a law that extends this tax to low value imported goods that are less than A$1,000. Australia is the first company to take this step, and other countries could soon follow.
"For each country that starts rolling out those guidelines, there is a greater incentive for countries to work together because those guidelines will end up picking up foreign suppliers required to register within their own jurisdictions," ATO director Jo Drum told International Tax Review. "So there's a great incentive for many countries which have picked up the imported services regime to start cooperating."
Australian businesses will have to charge consumers 10% GST on all online goods bought from overseas. This law will commence from July 1 2018.
Ernst & Young
The EY Centre
200 George Street
Sydney, New South Wales 2000
Tel: +61 2 9248 5555
Asia-Pacific Deputy Leader – Tax
Tel: +61 2 9248 4810
Oceania Tax Leader
Tel: +64 27 293 0787
Oceania Law Leader
Tel: +64 9 348 8287
Oceania Business Tax Services
Tel: +61 2 6267 3876
Oceania Tax Controversy Leader
Tel: +61 2 9248 4977
Asia-Pacific Tax Policy Leader
Tel: +61 2 8295 6473
Global Compliance and Reporting
Global Global Compliance and Reporting Leader
Tel: +61 2 8295 6949
Asia Pacific Global Compliance and Reporting Leader
Tel: +61 2 9248 4547
Oceania Compliance and Reporting Leader
Andrew van Dinter
Tel: +61 3 8650 7589
People Advisory Services
Global PAS Reward Leader
Tel: +61 427 501 247
Asia-Pacific PAS Leader
Tel: +61 2 9248 4970
Oceania PAS Leader
Tel: +61 3 8650 7624
Asia-Pacific PAS Performance Leader
Tel: +61 2 8295 6617
Asia-Pacific PAS Mobility Leader
Tel: +61 2 8295 6490
Asia-Pacific PAS Talent Leader
Tel: +61 408 966 670
Asia-Pacific PAS Reward Leader
Tel: +61 3 9288 8423
Asia-Pacific Talent and Reward Leader
Tel: +61 3 9288 8423
Tel: +61 3 9655 2718
International Tax Services
Tel: +61 2 8295 6226
Tel: +61 2 9248 4952
Asia-Pacific Transaction Tax Leader
Tel: +61 2 9248 4774
Oceania Transaction Tax Leader
Tel: +61 7 3243 3772
Tel: +61 2 9248 4952
Private Client Services
Asia-Pacific Private Client Services Leader
Tel: +61 7 3243 3711
|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)|
|Construction and related activities||5%||H|
|Royalties from, for example, patents, know-how||30%||F|
|Fund payments from managed investment trusts||15%||H|
|Branch Remittance Tax||0%|
|Interest (debentures, state and federal bonds and offshore banking units)||0%||F|
A) The rate is 28.5% for eligible small business entities with turnover of less than A$2 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 non-residents. A reduced rate (5% in recent treaties) applies to residents of treaty countries.
H) The filing of an Australian tax return to obtain a refund may be required if this withholding results in an overpayment of tax. A variation of the rate to mitigate the adverse cash flow impact is available to certain taxpayers that have previously filed tax returns in Australia.
I) Effective from July 1 2012, managed investment trusts that hold only newly constructed energy-efficient commercial buildings may be eligible for a 10% withholding tax rate.
Martin Fry is the practice leader of the tax department at Allens. The firm advises clients on a range of tax matters including income tax, capital gains tax, GST and dispute resolution. The tax professionals at Allens assist their corporate clients with all types of transactions. These transactions include M&A, restructuring and capital management.
Fry's clients include domestic and international corporations. He helps them in tax matters concerning domestic and cross-border financing arrangements, public company mergers and takeovers, and corporate restructuring. Fry has also been involved in infrastructure projects in the energy and transport sectors.
Charles Armitage is a partner at the firm. He has more than 28 years of corporate tax experience. This experience covers all aspects of income tax. Sarah Bernhardt is also a partner at the firm. She has more than 25 years of tax experience. Bernhardt's expertise is mainly in corporate, international and employment taxation. Adrian Chek is a partner whose expertise includes GST, income tax, capital gains tax and indirect taxes.
Mark Leibler is the head of the tax practice at Arnold Bloch Leibler. The practice provides tax advice to clients on commercial transactions. The firm also advises the Australian government on revenue law issues. It has experience negotiating with high-ranking officials from the ATO. The practice's clients include MNEs and wealthy private clients.
Peter McCullough is the head of the tax department at Ashurst. The tax department comprises five partners and 10 fee earners. Most of the firm's partners have experience working for the Big 4 accounting firms. In the last year, James Sainty, Jamie Bang, Valerie Misa and Struan Davidson have joined the practice.
The tax team provides clients with a full range of advisory tax services. The team works with colleagues in other disciplines to provide a complete service on transactional and litigious matters. This enables it to provide clients with a 'one-stop shop' for all their tax advisory needs. Tax litigation matters are handled by team members including McCullogh, Bill Cannon, Geoff Mann, Barbara Phair and Vivian Chang.
The firm's clients include GE, BHP Billiton, Macquarie, Fletcher, Brookfield as well as banks ANZ, CBA, Westpac and NAB. Ashurst is advising Transport for New South Wales on all tax aspects of the Sydney Metro and Southwest Project.
John Walker is the head of the tax department at Baker McKenzie. The firm's tax practice comprises three partners and 10 other fee earners. Tom Garwood joined the practice from May 2017.
The tax department advises on all aspects of income tax, stamp duty, land tax, GST and employment taxes. The department's ability to provide integrated tax advice to its clients distinguishes Baker McKenzie from other firms in the Australian market. Walker has a strong reputation regarding his advice on financial products and attracts investment banking clients. He is a member of the firm's global tax steering committee enabling the firm to have an additional reach throughout the Asia region. Amrit MacIntyre is one of Australia's best-recognised lawyers, and works in the property and energy sectors. Dixon Hearder leads many engagements with the ATO on MAAL, GST and other multinational tax reviews. He is active in the non-profit sector.
Theo Sakell and Denise Honey lead the tax department at Baker Tilly Pitcher Partners. The practice comprises 30 partners and 120 tax professionals. Within the department, 15 tax professionals handle indirect tax, 12 professionals deal with corporate tax, and tax disputes are handled by 12 professionals. Julian Cheng joined the practice in February 2017.
The firm was created in 1991 when it broke away from KPMG. The firm distinguishes itself from others by focusing on the provision of quality advice to clients in the middle market. This market includes wealthy family groups, large private companies and SMEs. Baker Tilly has done work with international inbound and outbound clients.
Sakell is a member of the firm's Asia Pacific tax committee. He is also the member of the Australian Treasury's tax treaties advisory panel. Honey is a member of the Treasury's BEPS tax advisory group.
The tax practice at Clayton Utz comprises experienced lawyers and has offices in Sydney, Melbourne, Brisbane and Perth. The members of the practice provide an integrated service in relation to tax matters. The tax lawyers' range of expertise includes accounting, financial services, tax litigation and corporate law aspects of taxation. The members of the practice work with other practice groups including banking and financial services when assisting clients with transaction advice.
Andrew Sommer is a partner and his experience includes indirect taxation. Sommer is particularly strong in GST matters. His tax experience includes income tax, payroll tax and fringe benefits tax. Sommer also has experience managing disputes with the tax authorities. Another partner at the firm is Niv Tadmore, whose expertise includes cross-border investments; energy and resources projects; and dispute resolution. He is a member of a number of committees, including the ATO's Large Business Liaison Group. Jonathan Donald is a partner at the firm who advises clients in corporate taxation, M&A and private equity.
The tax practice at Corrs Chambers Westgarth, Taxand Australia advises its clients in the areas of capital markets, M&A and real estate. The practice also assists clients in the public and private sector on infrastructure projects in Australia including the Gold Coast Rapid Transit Project and the Victorian Desalination Project.
Rhys Jewell is a partner at the firm and his expertise includes M&A, corporate restructuring and infrastructure. He has provided tax advice for healthcare products distributor EBOS Group and rail freight operator Aurizon and the Victorian and Queensland governments. Heran Kim is a special counsel at the practice. Her experience includes stamp duty and GST. Her clients have included Pfizer and Archer Capital.
Deloitte provides its clients with integrated tax services. These tax services include business tax, international tax, M&A, indirect tax, research and development and government incentives. The firm is part of a global network of tens of thousands of professionals in independent firms across the world.
Brett Todd is the managing partner at the firm. He has 17 years of experience handling Australian tax matters. His experience includes tax structuring issues, M&A, IPOs, private equity acquisitions and vendor tax due diligence.
Trisha Barton is an M&A partner at the firm. She has more than 12 years of experience advising on M&A, tax structuring, IPOs, private equity investments, and vendor tax due diligences. John Koutsogiannis is the leader of the firm's New South Wales indirect tax practice, which comprises 30 indirect tax specialists including five partners. Paul Culibrk is a tax partner with more than 13 years of experience handling Australian and international tax matters. His M&A experience includes tax due diligence, cross-border structuring, corporate restructuring and tax consulting services for clients from a wide variety of industries.
Jock McCormack is the head of the tax department at DLA Piper. The tax practice comprises two partners and six other fee earners. McCormack and James Newnham are specialists in corporate and international tax. Peter Charteris is a specialist in stamp duty. Chris Fielden joined the firm in May 2016.
The department's direct tax practice works in all specialties, including corporate tax planning and advisory, M&A, finance, investment fund structuring, real estate and remuneration tax planning. The department is supported by the firm's global team of more than 280 tax lawyers and economists. The firm's clients include companies like Macquarie Group, Aviva and Westpac.
McCormack sits on a number of committees, and advises the Australian government through his role on the Australian Treasury Tax Design Advisory Panel. In the last year, he provided tax structuring advice on the proposed acquisition of 63% of Batlow Fruit Co-operative by Isola Capital.
Geoff Blaikie is the head of the tax department at EY. Alex Worner joined the firm in August 2016, and Andrew Sharp joined in January 2017.
Its tax performance advisory practice assists clients with complex regulatory, technology and globalisation challenges. It achieves this by maximising the effectiveness of the clients' tax functions with the implementation of efficient tax processes and software tools.
The tax department can rely on its global network, which includes tax professionals in 85 countries. This helps clients to understand global changes. It also enables the tax department to assist clients in resolving complex or sensitive tax disputes around the globe. The network has experience in assisting the development and implementation of policy initiatives.
The firm's global network gives it the ability to support businesses in preventing, managing and resolving their tax controversy matters. EY's services regarding tax controversy include pre-filing controversy management and tracking, dispute resolution, return filing, preparing relevant back-up documentation and working with businesses to implement tax controversy management best practices. The firm assists its clients through the audit life cycle to ensure that the matter can be resolved. EY has indirect tax specialists to help clients comply with specialist indirect taxes.
Nicole Bradley is the national managing partner of the tax practice at Grant Thornton. The firm's tax services include corporate tax, GST, fringe benefits tax and international tax. The practice also provides tax advice in relation to ATO audits and reviews. It helps selling clients with exit strategies, including advice on the capital gains tax rules and indirect tax.
Greenwoods & Herbert Smith Freehills and Herbert Smith Freehills provides its clients with integrated and seamless taxation advisory services including transactional and disputes advisory work, and compliance services. The firm advises clients on all aspects of corporate and commercial law as well as tax. The two firms particularly 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, tax investigations and disputes.
Tony Frost is the managing director at Greenwoods & Herbert Smith Freehills. Hugh Paynter leads the commercial litigation and dispute resolution department.
The firms have a good working relationship with the ATO, the state and territory revenue offices, and the state and federal treasuries. Liaising with these revenue authorities enables the firms to provide its clients with feedback on the view of the authorities on technical and practical issues.
Key clients include NAB/MLC, Lend Lease, Gateway Lifestyle, Mirvac, Commonwealth Bank of Australia and Frasers Property Group. In 2017, the firm advised holders in the prospectus on CBA's PERLS IX offering regarding tax consequences.
Greg Reinhardt is the head of the tax practice at Henry Davis York. The practice's clients include public and private companies, foreign corporations and banks. Its tax services include M&A, disposals, corporate insolvencies, restructuring and property and infrastructure projects. The practice works with its funds experts when handling international fund tax issues. It liaises with the Treasury on reforming the tax industry which includes the treatment of managed funds. Henry Davis York advises property developers in relation to income tax, GST and stamp duty.
The tax practice at Johnson Winter & Slattery advises clients on direct and indirect tax matters. These tax matters include corporate restructuring, M&A and public private partnerships. The firm handles a range of tax dispute-related matters including federal and state taxation audits and reviews. Johnson Winter & Slattery has advised Microsoft Corporation, Treasury Wine Estates, SABMiller, Unilever, and Blackmores. A key contact at the practice is Reynah Tang. He is a partner who specialises in corporate and international taxation.
Justin Cherrington is the head of the national taxation team at King & Wood Mallesons (KWM). He is also the global practice coordinator for taxation for the firm's network. The firm's services include corporate tax, indirect taxation, tax planning and tax disputes. KWM has advised Telstra on the National Broadband Network project.
Cherrington is based in the firm's Sydney office and specialises in income tax issues. He has advised clients on corporation tax, corporate restructures, acquisitions and international tax issues.
Andrew Clements is a partner at the practice and he is based in the Melbourne office. Clements advises clients on income tax matters. His work is particularly focused on capital gains tax, imputation and international tax. Darren McClafferty is a partner who assists clients with income tax, employment taxes, the taxation of not-for-profits and international tax matters. He has handled tax disputes with the tax authorities including the ATO. Michael Clough is a partner who advises clients on income tax issues. Katrina Parkyn is a partner in the firm's Brisbane office. She advises clients on income tax and stamp duty matters.
David Linke and James Macky lead the tax practice at KPMG. Linke is the national managing partner, and Macky is the national head of corporate tax. The practice comprises 35 partners, and 218 other fee earners. It has grown with the appointment of four new partners: Glenn Jackson, Lani van-Ooy, Peter Mallyon and Natalie Raju. In 2016, a number of tax professionals joined the practice, including Gaby Burcul and David Cloete.
In 2016, Adam Gibbs and Mallyon advised Nippon Life in the acquisition of NAB's life insurance business. The experience of KPMG's tax team in life insurance M&A enabled it to liaise with Nippon's legal advisers regarding their negotiation of separation contracts with NAB. The firm also addressed the break-up of NAB's life insurance and superannuation businesses.
In the last year, the tax team advised the Endeavour Consortium on its bid for a 50.4 % interest in the 99-year lease of Endeavour Energy Assets. This transaction was worth $5.74 billion and was the first major privatisation to be implemented after release of the Treasury's stapled structure consultation paper.
The tax practice at McCullough Robertson comprises five partners, two consultants and two special counsels. Some of the firm's tax lawyers are also qualified chartered accountants. The practice provides clients with tax advice on restructuring, M&A and debt and equity fundraisings. It assists clients with audits and participates in negotiations with the ATO and state revenue authorities. The firm represents clients in tax cases before the state and federal tribunals and courts. Its clients include company groups, private groups, high-net-worth individuals, accountants, lawyers and financial planners.
The tax practice at MinterEllison advises its clients on a range of tax issues including direct and indirect taxes; tax structuring; and tax risk management and disputes. The firm's experience of the ATO's policy-making and decision-making processes enables it practice to advise clients in relation to their transactions and addressing tax risk. MinterEllison's advice to clients takes into account corporate and international tax issues, and the structuring implications of GST and state taxes.
The lead contacts at the firm include the following partners: William Thompson, Alan Kenworthy and Carmen McElwain. Thompson advises clients on tax issues including corporate taxation, GST and stamp duty. He resolves tax issues with the ATO and state revenue offices. Kenworthy has more than 20 years of experience in advising domestic and international MNEs, government and charitable entities. His tax expertise includes M&A and divestments, due diligence reviews and corporate taxation. McElwain leads the firm's national tax controversy practice. She has 25 years of experience handling tax matters regarding the ATO.
The tax practice at Norton Rose Fulbright advises clients on direct and indirect taxation matters. These include income tax, capital gains tax, stamp duty, GST and international tax. The firm's clients include MNEs, accountants, private and public capital firms and individuals. Andrew Spalding is a partner who advises clients on the stamp duty implications of business and property transactions. Spalding also provides advice on the taxation issues in relation to employee share and option schemes. Another partner at the practice is Ellen Thomas. She assists clients with M&A, corporate restructuring, international tax planning, audits and negotiations with the ATO.
Pete Calleja is the head of the tax practice at PwC. Calleja leads a national team that comprises more than 1,000 professionals. The practice's services include corporate tax, GST, tax controversy and stamp duty. Hayden Scott is the tax controversy leader, and helps clients in litigation matters with the ATO. James Strong is a partner who advises clients in the mining and energy sectors on cross-border investment and M&A. Robert Hines is a partner with more than 10 years of experience in international tax. Sarah Saville is a corporate tax partner who has more than 13 years of income tax experience. This experience includes international tax, M&A and corporate income tax.
|Tier 1 - Australia|
|Greenwoods & Herbert Smith Freehills and Herbert Smith Freehills|
|King & Wood Mallesons|
|Tier 2 - Australia|
|Tier 3 - Australia|
|Arnold Bloch Leibler|
|Corrs Chambers Westgarth, Taxand Australia|
|Norton Rose Fulbright|
|Tier 4 - Australia|
|Baker Tilly Pitcher Partners|
|Henry Davis York|
|Johnson Winter & Slattery|