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Pandemic international business questions on tax and super

International business frequently asked questions

This page answers tax and super questions that international business may have about COVID-19. We will update this information regularly.

Find out answers to questions on:

Central management and control (CM&C)

Question: I run a foreign incorporated company that is not an Australian tax resident. I’ve needed to make alternative arrangements for board meetings because of travel restrictions. Does this mean the central management and control is in Australia?

Answer: If the only reason for holding board meetings in Australia or directors attending board meetings from Australia is because of the effects of COVID-19, then we will not apply compliance resources to determine if your central management and control is in Australia.

The spread of COVID-19 has resulted in overseas travel bans and restrictions and a high degree of uncertainty generally around international travel. You may be concerned about these effects on your corporate residency status because of a need to change locations of board meetings or where directors attend them from.

Some boards of foreign-incorporated companies that are not Australian tax residents may temporarily suspend their normal pattern of board meetings because either:

  • there are overseas travel bans or restrictions
  • the board has made the decision to halt international travel because of the present uncertainties around international travel due to COVID-19.

If these companies instead hold board meetings in Australia or directors attend board meetings from Australia, this will not by itself in the absence of other changes in the company’s circumstances alter the company’s residency status for Australian tax purposes.

We will continue to monitor the evolving effects on businesses in these circumstances and update our guidance if there are further developments as a result of COVID-19.

This question was last updated on 17 March 2020.

Permanent establishment

Question: I run a foreign incorporated company that is not an Australian tax resident. Does the unplanned presence of my employees in Australia now lead to the existence of a permanent establishment in Australia?

Answer: COVID-19 has resulted in overseas travel restrictions and a high degree of uncertainty generally around international travel. Foreign companies may be concerned about potential effects on their business and tax affairs because of the result of a presence of employees in Australia.

The effect of COVID-19 will not, in itself, result in the company having an Australian permanent establishment if it meets all the following:

  • The foreign incorporated company did not have a permanent establishment in Australia before the effects of COVID-19.
  • There are no other changes in the company’s circumstances.
  • The unplanned presence of employees in Australia is the short-term result of them being temporarily relocated or restricted in their travel as a consequence of COVID-19.

If you didn’t otherwise have a permanent establishment in Australia before the effects of COVID-19 and the presence of employees in Australia is because they are temporarily relocated or restricted in their travel as a consequence of COVID-19, then we will not apply compliance resources to determine if you have a permanent establishment in Australia.

We will continue to monitor the evolving effects on business and issue further guidance if there are developments as a result of COVID-19.

This question was last updated on 17 March 2020.

Significant global entity (SGE) penalty

Question: If I don’t lodge an approved form including the general purpose financial statement (GPFS) on time, will the ATO remit the failure to lodge on time SGE penalty?

Answer: We encourage you to lodge on time.

However, due to the ongoing effects of COVID-19, we’re extending the automatic remission of failure to lodge on time penalties that apply to significant global entities (SGEs).

If lodgment of an approved form (including the GPFS) is less than 30 days late, we will remit the failure to lodge on time SGE penalty to nil for the period until 14 August 2020 if all of the following apply:

  • You are unable to lodge that approved form (including the GPFS) due to circumstances beyond your control that arise as a direct result of COVID-19.
  • The failure to lodge on time SGE penalty is incurred after 23 January 2020 and on or before 14 August 2020.

If your lodgment is more than 30 days late, you will need to contact us to discuss your specific circumstances.

Despite the penalty remission, you will still need to make your payments on time. If you are having problems making your payments, you may be able to defer some payments.

You can contact the large services team to discuss lodgment and payments.

We will continue to monitor the effects of COVID-19 and will update our guidance as further developments occur.

This question was last updated on 27 July 2020.

PAYG withholding

Question: I’m a foreign employer and my employee is not a resident of Australia. They are working in Australia temporarily as a result of COVID-19. Do I have to register for PAYG withholding?

Answer: We do not expect you to register for PAYG withholding if the only reason your employee is now working in Australia is because of the effects of COVID-19 on travel and it is anticipated that they will leave before 30 June 2020.

Where your employees continue to work in Australia after 30 June 2020, the usual employer obligations will apply. You will need to register and withhold under the PAYG withholding system where your employee’s income is Australian sourced. You will also need to continue to pay the super guarantee for your employees, unless an exemption applies, such as a certificate of coverage for international social security agreements.

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