Australia

Details

  • Service: Tax, Dispute Resolution
  • Type: Regulatory update
  • Date: 26/05/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Jeremy Geale

Jeremy Geale
Partner, Tax

+61 2 9335 8422

jgeale@kpmg.com.au

Non-residents beware 

by Jeremy Geale, Tax Law Specialist

We have recently seen an increase in the issue of notices by the Commissioner to non-residents requiring them to provide security for future tax debts. In particular, we have seen notices issued where the non-resident is selling Australian property or shares in Australian companies.

The notices are being issued under s. 255 of Schedule 1 of the Taxation Administration Act. The provision allows the Commissioner to issue a notice to a taxpayer requiring the taxpayer to give security for the payment of an existing or future tax-related liability. The notices, in effect, give the Commissioner an ability to require payment of a tax liability many months in advance of the liability actually arising. In our experience, the Australian Taxation Office (ATO) has also set very short timeframes for compliance with the notice, in some cases less than seven days.

 

Given that failure to comply with the notice is an offence, non-residents need to consider carefully how they respond to any such notice. We can help non-residents receiving notices by:

 

  • negotiating with the ATO to agree appropriate security arrangements
  • requesting the notices be withdrawn where:
    • there is no reasonable basis for the issue of the notice
    • the security is required is excessive having regard to the circumstances of the non-resident

Alternatively, prior engagement with the ATO, demonstrating how any Australian tax will be satisfied, may avoid the issue of a notice all together.

 

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