Australia: draft tax ruling addresses central management and control test for tax residency

by Davide Anghileri

The Australian Taxation Office (ATO) has released a draft taxation ruling setting out the ATO’s view on when a foreign incorporated company is considered an Australian tax resident under the central management and control test. Comments on the draft must be sent by 12 May.

The draft, Central Management and Control test of residency (TR 2017/D2), elucidates the application of the central management and control test. Under the test, a company is resident of Australia when business is carried on in Australia and central management and control is undertaken in Australia.

The draft states that central management and control involves making high-level decisions that set the company’s general policies and that determine the direction of operations and types of transactions the company will undertake.

In contrast, day-to-day conduct and management of activities and operations, such as company administration, are excluded from central management and control, the ATO said.

The ruling points out that one must identify where central management and control is exercised. This should be the where the company is factually and substantially controlled and directed, and may not necessarily coincide with the location of legal power or authority to control and direct the company, the ATO said.

The ruling also clarifies when a company can be considered to carry on business in Australia.

Davide Anghileri

Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.

Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues. He can be reached at

Davide Anghileri

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