Key News Summary: PCG 2018/D3 as been finalised as PCG 2018/9 extending the ‘non-audit’ period to 30 June 2019. This PCG gives practical guidance on the ‘central management and control’ (CM&C) issue for company tax ‘residency’ purposes.


On Wednesday 5 December 2018, the ATO finalised PCG 2018/D3 – merely extending the ‘non-audit’ period from 13 December 2018 to 30 June 2019 (in para 101).

On 20 December 2018, the ATO finalised this PCG as PCG 2018/9. It commences from 21 June 2018 (the issue date of TR 2018/5).

The CM&C issue, is part of the tax ‘residency’ issue, for companies, which the ATO covered in its ruling: TR 2018/5, which he issued on 21 June 2018.

This residency issue gained currency, after the High Court case: Bywater [2016] HCA 45, which held that foreign incorporated companies, with all foreign directors, all meeting outside Australia, were nonetheless Australian resident companies (and thus taxable in Australia). This was because the director was a ‘mere puppet’ of an Australian accountant, in Australia.

PCG stands for ‘Practical Compliance Guideline’ and is designed to give practical guidance as to the sorts of arrangements that ought to be safe from ATO audit (a sort of ‘swim between the flags’ guidance – which ought be useful, but needs to be viewed in terms of the ATO’s inherent wish to be conservative, or err on the side of a narrow interpretation, that protects the revenue).

Tax technical has previously covered this PCG, and the companion ruling: TR 2018/5 as follows:

[ATO website: PCG 2018/D3 (finalised), PCG 2018/9, TR 2018/5; LTN 235, 5/12/18; Tax Month – December 2018]

FJM 8.1.18

CPD (comprehension) questions

  1. What was the change to the PCG, on 5 December 2018?
  2. When was this draft PCG finalised, and as what PCG number?
  3. This PCG gives guidance on the CM&C part of what larger tax issue?
  4. Why and when did this issue become notorious?
  5. What ruling did the Commissioner issue on this wider issue and when?

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