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Income from overseas branches for privately owned and wealthy groups

Overseas branch or permanent establishment income incorrectly recognised as NANE branch income attracts our attention.

Last updated 16 October 2024

We focus on an Australian company’s overseas branch or permanent establishment income that has been incorrectly recognised as non-assessable non-exempt (NANE) branch income under section 23AH of the ITAA 1936. We also focus on the deductions being claimed to have been incurred by the Australian company in deriving section 23AH NANE branch income for which no deduction is available.

Situations that attract our attention include where:

  • there is no permanent establishment but section 23AH NANE income is declared
  • a permanent establishment may not have passed the active income test and the income is both
    • adjusted tainted income
    • eligible designated concession income (this applies to permanent establishments in listed countries only)
  • there are low non-deductible expenses but section 23AH NANE income is declared.

For information on foreign branch income, see Taxation of foreign dividends and branch profits.

QC69451