The Australian Taxation Office (ATO), in TR 2014/3 released June 11, has ruled that a company that is taken to have a permanent establishment (PE) in relation to substantial equipment will not also automatically be considered to be carrying on a business at or through the PE under section 23AH of the Income Tax Assessment Act 1936, concerning non-assessable non exempt income.
Rather, the determination of whether a company is carrying on a business at or through the PE is a question of fact and degree to be determined with regard to the circumstances of each particular case, the ATO said.
The ATO also said that even if a tax treaty deems a company to carry on a business through a PE, this does not mean that the requirement to carry on a business for the purposes of section 23AH is satisfied.
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