Listed country branch income of a resident company that is not assessable
Which resident companies qualify?
Two broad groups qualify to have certain branch profits treated as non-assessable non-exempt income. These are resident companies that either:
- carry on business through a permanent establishment - for example, a branch - in a listed country or
- are partners of a partnership - or are presently entitled beneficiaries of a trust - that carries on business through a permanent establishment in a listed country.
Non-assessable non-exempt income treatment does not apply to:
- resident companies with permanent establishments in unlisted countries
- resident taxpayers, other than companies, with foreign permanent establishments.
What is a permanent establishment?
A permanent establishment of an Australian resident company is a place through which the business of the company is carried on. The term 'permanent establishment' is defined in section 6 of the Act.
If the listed country is one with which Australia has a double taxation agreement, the meaning of the term permanent establishment is determined by the agreement.
Permanent establishments are referred to as branches in this part.