Hi Headhunter You are completely going in wrong direction here...

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Phalanx922

8 Posts.

06/09/20

22:30

Post #: 47128433
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Originally posted by Headhunter: ↑

Go read the explanatory memorandum for the introduction of section 99B (page 27 of the PDF in the below link). It quite clearly states that section 99B was introduced to combat foreign domiciled trusts with foreign source income. You may be getting confused with section 98 and 98A (both of which relate to resident trusts and foreign beneficiaries). But who knows, you don't seem to want to cite any legislative references, and are instead just making broad statements inconsistent with the tax acts.

http://classic.austlii.edu.au/au/legis/cth/bill_em/itab51978277/memo_0.html

'non-resident' in relation to a company means a company that is not a resident of Australia (in accordance with tax laws). The definitions of both non-resident and resident are set out in section 6 of the 1936 Act. Neither of them include a requirement that the company must have activities (or a permanent establishment) in Australia to be considered a non-resident under Australia's income tax law.

In respect of entities and who is actually being taxed in the hypothetical situation, under both section 99B and Division 7A it is the 'beneficiary' or 'shareholder/associate of a shareholder' who gets taxed not the foreign entity.

I suggest you read the below link in relation to Division 7A. The first point under the heading 'Private Companies' is quite clear....

https://www.ato.gov.au/business/private-company-benefits---division-7a-dividends/entities-and-taxpayers-affected/

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Hi Headhunter

You are completely going in wrong direction here
Please think logically, how can Australian Tax Law be implied on a foreign entity that is not registered in Australia and the associates of that entity has no connection with Australia. The foreign entity is not deriving income from Australian sources.
As long as the funds transferred to the individual in Australia is not as part of the distribution, it is not taxable. Just by transferring funds does not mean it is an income.
I hope this makes bit more clear.
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0 Great analysis

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