b'13Companies & Businesses Certain foreign source income (conduit foreign income) distributed to non-residents Resident and non-resident companies arecan generally pass through a company tax free taxed at a rate of 30% with a lower rate of 27.5% for certain eligible companies (base rate entities).andwill not be subject to Australian tax in the Base rate entities are companies with anhands of those non- residents.aggregate turnover less than $50 million where less than 80% of the income is passive. A group of wholly owned companies that want to offset profits and losses between The Base rate will reduce to 26% for themembers or transfer assets without generating 2020-21 and 25% for the 2021-22 incomeincome tax need to form a tax consolidated years.group.There are no disincentives to the retention ofSingle Australian holding companies are company profits.generally required to form a tax consolidated Taxes are imposed on capital gains withgroup, however, it is possible to form a group scope limied in respect of non-residentswithout a single head company resident in (whether companies or individuals). Australia in certain circumstances.Hybrid mismatch rules which prevent entities with Australian taxable income from exploiting the difference in tax treatment of amounts in other countries.Trusts Trusts are widely used in Australia as they Where no beneficiary is presently entitled to offer asset protection, flexibility and capitalthe income of the trust, the trustee bears the gains tax advantages. liability for the tax at the top marginal rate. Great care needs to be taken when Distributions of trust income to non-structuring with trusts to avoid pitfalls. Recentresident beneficiaries may attract withholding changes have significantly increased reportingtaxes payable by the trustee. requirements and complexity relating to Trusts are classified as fixed, discretionary distributions to beneficiaries. or hybrid. Where income of a trust is distributed, the Trusts have specific rules in relation to the trust is not taxed but the beneficiary is taxedutilisation of losses and the pass through of on the income.tax credits. Income retains its nature and Losses of trusts cannot be passed through characteristics as it flows through a trust andto beneficiaries.certain types of income can be streamed to specific beneficiaries.'