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An analysis from Corrs Chambers Westgarth, Taxand Australia
Australia’s tax landscape continues to evolve, with three recent developments carrying significant implications for multinational businesses and international investors. The Australian Taxation Office’s final ruling on cross-border software payments significantly expands the circumstances in which payments may be treated as royalties and subject to Australian withholding tax, with potential exposure for arrangements dating back to July 2021.
Changes to Australia’s foreign resident capital gains tax regime, effective from 1 October 2026, also broaden the definition of taxable Australian property and introduce a rolling 365-day principal asset test. Foreign sellers must additionally notify the ATO of certain proposed disposals valued at A$50 million or more where they intend to declare that the interests being sold are not indirect Australian real property interests.
Finally, a recent Federal Court decision concerning the sale of the Sydney Hilton Hotel has highlighted the operation of Australia’s general anti-avoidance rule. The ruling underlines the importance of contemporaneous documentation supporting the commercial rationale for transaction structures, particularly where pre-sale restructuring or intercompany debt is involved.
Angelina Lagana and Rhys Jewell from our Australian member firm, Corrs Chambers Westgarth, examine the three developments and their implications for businesses operating or investing in Australia, which you can read here.
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