This Draft Taxation Ruling, issued on Wed 11.12.2013, considers the requirement in s23AH of the ITAA 1936 where a company is taken to have a permanent establishment (PE) in relation to substantial equipment under both s6(1)(b) of the ITAA 1936 and under Australia’s tax treaties.

Broadly, the Draft states that where the company is taken to have a PE in relation to substantial equipment by domestic law or tax treaty, the foreign income derived will be non-assessable non-exempt (NANE) income under s23AH, unless the income is derived in carrying on a business at or through the PE in the foreign jurisdiction.

DATE OF EFFECT: Proposed to apply both before and after its date of issue.

COMMENTS are due by 14 February 2014. ATO contact: Glenn Davies – Tel: (07) 3213 5327; Fax (07) 3119 9846; Email: glenn.davies@ato.gov.au.

[FJM Note:    This is proposing to rule that income is not NANE under s23AH, from carrying on a business in foreign permanent establishment, just because the permanent establishment is deemed under domestic law or a relevant Treaty, or even because the taxpayer is deemed to carry on business from that P/E by the Treat for the purposes of that Treaty.]

[LTN 240, 11/12/13]

About the author