Australian tax for foreign firms without an Australian office presence

August 2012

Do you know a foreign firm may be liable to pay taxes in Australia for sending its employees to work on projects without a physical office or traditional concept branch in Australia?

It is not uncommon to be engaged in assisting Australian projects for specialist or one off assignment involving a building site or construction or installation project.

Depending on the length of the project and also the existence of double tax treaty, the project itself may trigger a notional branch or a tax permanent establishment.  Once a permanent establishment is created, the ATO has the right to tax the profit you derive as a foreign firm from the project.

Further, various employment taxes may be applicable to the foreign employees such as PAYG withholding, superannuation, Workcover and payroll tax although certain exemptions are available.

This is an extremely complex area. Please contact Matt Zhou on 02 9957 4033 for more information or to discuss your circumstances.

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