Tax Strategy | Establish a Foreign Company
For Australian residents who wish to conduct a trading or investing business overseas, this strategy involves incorporating a company overseas. Typically, the overseas company will be incorporated in a country with lower tax rates than Australia, and have foreign directors. If the foreign incorporated company ensures its Central Management & Control (CM&C) is overseas (and not in Australia), then the company profits will not be taxable in Australia.
For the CM&C of a foreign incorporated company not to be deemed to be in Australia requires:
- Foreign directors who actually make strategic company decisions, and don’t just rubber stamp shareholders decisions.
- That the foreign directors have the relevant skills, education & experience to make the strategic company decisions.
- All directors’ meetings and decisions taken are minuted.
- All directors’ meetings are held overseas.
- Foreign directors are provided with timely and relevant information so they are kept up to date with company developments.
- Directors meetings are held frequently.
In addition, with this strategy you also need to consider Australia’s CFC (controlled foreign corporation) and transfer pricing rules.
Similar posts you may like
- Tax Planning Strategy 170 | Amend Prior Years Tax Returns
It is good practice to review the prior year’s tax returns of all new clients to see whether any allowable deductions have been omitted Read more
- Travel to co-existing work location
Co-existing work locations travel involves travel which can be attributed to the employee having to work in more than one location. This is the Read more
- Tax Planning Strategy 180 | Superannuation Proceeds Trust
Tax planning strategy 180 The superannuation proceeds trust strategy involves creating a special type of testamentary trust under a will that is only funded Read more
- Tax Planning Strategy 155 | Salary Packaging Associated Leases
An associate lease is an agreement where an associate of the employee (typically spouse or partner), leases an existing or replacement car to the Read more
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2