b'ESV 13Doing business in AustraliaCompanies & Businesses Resident and non-resident companies Single Australian holding companies are taxed at a rate of 30% with a lowerare generally required to form a tax rate of 26% for certain eligible companiesconsolidated group, however, it is (base rate entities). possible to form a group without a singleBase rate entities are companies with anhead company resident in Australia in aggregate turnover less than $50 millioncertain circumstances.where less than 80% of the income is Hybrid mismatch rules exist which passive. prevent entities with Australian taxableThere are no disincentives to theincome from exploiting the difference in retention of company profits. tax treatment of amounts and structuresTaxes are imposed on capital gains within other countries.scope limited in respect of non-residents The Federal Budget handed down on(whether companies or individuals). 6 October 2020 provided that:Certain foreign source income (conduit foreign income) distributed to non- 1.Loss carryback rules are to beresidents can generally pass through a introduced for a 3 year periodcompany tax free andwill not be subject2.An instant asset write off is availableto Australian tax in the hands of those for most depreciable assets acquired non- residents.and installed ready for use between A group of wholly owned companies that 7:30pm 6 October 2020 to 30 Junewant to offset profits and losses between 2022.members, or transfer assets without triggering income tax need to form a tax consolidated group.Trusts Trusts are widely used in Australia as Distributions of trust income to non-they offer asset protection, flexibilityresident beneficiaries may attract and capital gains tax advantages forwithholding taxes payable by the trustee. Australian residents.Trusts have specific rules in relation toGreat care needs to be taken whenthe utilisation of losses and the pass structuring with trusts to avoid pitfalls.through of tax credits.Recent changes have significantly Losses of trusts cannot be passed increased reporting requirements andthrough to beneficiaries.Partnerships complexity relating to distributions to beneficiaries. The definition of a partnership is Income derived by the partnership retainsWhere income of a trust is distributed, considered to include taxpayers in receiptits nature in the hands of the partners. the trust is not taxed but the beneficiary of income jointly as well as more formally There is no capital gains tax in ais taxed on the income. established partnerships. partnership as each partner is deemed to Income retains its nature andEvery partnership is required to prepareown a share of each of the assets of thecharacteristics as it flows through a and lodge an income tax return, however,partnership, and accordingly, any gaintrust and certain types of income can be there is no tax liability at the partnershipor loss on the disposal of an asset is alsostreamed to specific beneficiaries.level. shown at the partner level.Where no beneficiary is presently entitledThe relevant portion of the taxableto the income of the trust, the trustee income or loss of a partnership isbears the liability for the tax at the top returned in the income tax return of eachmarginal rate.of the partners, which is then taxed in their hands.'