Australia: Tax

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This country-specific Q&A provides an overview to tax laws and regulations that may occur in Australia.

It will cover witholding tax, transfer pricing, the OECD model, GAAR, tax disputes and an overview of the jurisdictional regulatory authorities.

This Q&A is part of the global guide to Tax. For a full list of jurisdictional Q&As visit

  1. How often is tax law amended and what are the processes for such amendments?

    There is no set time at which amendments to the Australian tax laws are made. Nor is there a set process for consultation. Legislative amendments are typically made on the advice of the Commonwealth Treasury to the Federal Treasurer and Assistant Treasurer. Depending on the nature of the amendments, an Exposure Draft (draft legislation) may be released for consultation prior to the introduction of the relevant amending Bill into Parliament. For time sensitive measures, Commonwealth Treasury can make announcements of the intention to introduce new taxation measures which will take effect from the date of the announcement even though draft legislation has not been prepared at the date of the announcement.

    The Federal Government prepares an annual Federal Budget each May and often reforms to the Australian tax laws are announced as part of the Budget process. This may involve new revenue measures (such as a new tax or rate increase) or expenditure measures (such as tax concessions). The number and nature of changes will vary depending on the year and the political priorities of the Government.

    There is however a set Parliamentary procedure for the amendment of tax laws. The Australian Constitution mandates that laws imposing taxation shall only be concerned with taxation generally and concern only one subject of taxation. This requirement is designed to ensure Parliament separately considers different taxation measures by requiring separate laws. The consequence is that more legislation is required to give effect to a particular taxation measure than may be expected in other jurisdictions.

    Revenue laws must originate in the House of Representatives where they undergo Parliamentary debate and amendment. If passed, the tax laws proceed to the Senate where they must be approved by a majority. The Australian Constitution does not permit the Senate to make any amendments to revenue laws. They can only refer the measure back to the House of Representatives to make the amendments. A proposed law becomes an Act of Parliament once it passes both houses of Parliament by majority and receives Royal Assent.

    Consultation in relation to the amendment of tax laws will usually include the Australian Taxation Office (responsible for administering the laws), the Board of Taxation and other consultative groups made up of taxpayers, accountants and lawyers.

    Exposure Drafts and consultation papers are made available through the website of the Commonwealth Treasury and Bills (once introduced into Parliament) are made available through the Australian Parliament House website.

    State based taxes (stamp duty, land tax, payroll tax) are not constrained in the same manner. However, the basic mechanisms are similar.

  2. What are the principal procedural obligations of a taxpayer, that is, the maintenance of records over what period and how regularly must it file a return or accounts?

    There are numerous different taxation regimes across Australia. Each has different reporting obligations and different record retention requirements. At the Federal level general obligations include:

    1. an obligation to keep and maintain appropriate records for 5 years;
    2. lodge an annual income tax return (within 3 months after the end of the entity's income year);
    3. lodgement of a quarterly (or monthly for large businesses) "business activity statement" (BAS) for goods and services tax (GST); and
    4. prepare and provide PAYG summaries (employers only) in relation to tax amounts withheld from employee wages.

    Under the new transfer pricing provisions (see section 19), the Commissioner has 7 years within which to issue an amended assessment to adjust for a transfer pricing benefit. The transfer pricing regime imposes substantial penalties and those penalties will vary considerably depending on the circumstances. One important factor is whether a taxpayer has a 'reasonably arguable position' that the transfer pricing provision should not apply. Relevantly, a taxpayer is deemed to not have a reasonably arguable position unless they have retained contemporaneous transfer pricing documentation (ie documents describing the arm's length conditions, the methods used etc). The corollary of this is that taxpayer's will need to retain their transfer pricing records for 7 years.

  3. Who are the key regulatory authorities? How easy is it to deal with them and how long does it take to resolve standard issues?

    The key regulator for all federal taxation matters is the Australian Taxation Office (ATO), represented by the Commissioner. The ATO is responsible for the administration of (including others): income tax, goods and services tax, fringe benefits tax and luxury car tax. A separate body, Border Force (part of the Department of Immigration and Border Protection) is responsible for the administration of customs and excise matters.

    In recent years, the ATO has indicated a desire to engage early with taxpayers, particularly those that they consider 'high risk' (eg high net worth individuals and large multinationals).

    The ATO has specialist groups to assist in providing guidance to particular industry sectors to develop a greater understanding of the issues in those sectors. Further, the functions of audit, review and dispute resolution and legal interpretation are separated in order to assist in the resolution of disputes with taxpayers.

    In many cases, minor issues can be resolved be direct engagement with the ATO and its representatives. This is done in a pragmatic fashion, although the ATO places a premium on treating all taxpayers the same and this can be an obstacle to the resolution of individual disputes as they need to be seen in the context of broader issues.

    Specific issues of legal interpretation can be addressed through applying to the Commissioner of Taxation for a private ruling (a written statement about how the law applies in specific circumstances). Whilst simple private rulings can be issued within a matter of weeks, more complex issues usually take a number of months to resolve.

    State-based taxes are administered by the relevant jurisdiction revenue authority (usually referred to as the Office of State Revenue). Generally, the various offices are open to engagement and discussion to work through any revenue issues that arise. It normally takes approximately a month to resolve 'standard issues'. These Offices of State Revenue also have different systems for public and private rulings to be issued to taxpayers on particular issues.

  4. Are tax disputes capable of adjudication by a court, tribunal or body independent of the tax authority, and how long should a taxpayer expect such proceedings to take?

    The first stage of formal review in relation to a ruling or an assessment by the ATO is generally an “objection”. This objection process is an internal review of the assessment or ruling decision by a separate group (Review and Dispute Resolution) within the ATO itself. If a taxpayer is dissatisfied with the outcome of the objection process, the taxpayer can appeal either to an administrative tribunal (the Administrative Appeals Tribunal (AAT)) or the Federal Court. These avenues of appeal are slightly different in their scope – an administrative tribunal is said to “stand in the shoes” of the original decision maker to “remake” that decision. The Federal Court, on the other hand, is more focussed on the legal issues and the legal tests that should have been adopted by that decision maker. In practical terms, both processes are legalistic in their proceedings including presentation of formal evidence (although there is often more latitude around in this in the AAT), representation by specialist advocates and witnesses presenting testimony (written and oral).

    Neither process is especially quick and taxpayers should expect that the process will take 12 to 18 months. Of course, both decisions of the AAT and the Federal Court are subject to appeals and these appeals can extend the time frame for resolution of a dispute to many years.

    State based taxes have a similar operation with a process of internal objection in relation to assessments and appeals to either administrative tribunals or the Supreme Court in each jurisdiction.

  5. Are there set dates for payment of tax, provisionally or in arrears, and what happens with amounts of tax in dispute with the regulatory authority?

    Income tax only becomes due and payable when the Commissioner of Taxation makes an assessment of your income for the year. As an assessment is deemed to be made upon lodgement of the relevant return, this means that for most entities, income tax will be due or payable 21 days after the day they lodge their tax return.

    The standard tax year in Australian ends on 30 June each year. For most entities adopting this standard reporting period, their income tax return will be due by 31 October.

    The payment of a single, annual tax liability may present a considerable risk to liquidity and an unacceptable risk to tax revenues if certain taxpayers do not adequately account for their tax liabilities throughout the year. To prevent these situations arising, the tax system imposes an obligation on certain taxpayers to pay their anticipated tax liability by way of monthly, quarterly or annual instalments. The regime only applies to those taxpayers that earn business and or investment income over certain thresholds and if the Commissioner notifies the taxpayer of an instalment rate. The taxpayer is still required to lodge a tax return at the end of the income year with the instalments amounting to a credit to offset the actual tax liability incurred.

    Reporting, for fringe benefits tax purposes, operates on annual basis ending each 31 March with returns usually due by 21 May in the following year of tax.

    Goods and services tax generally operates on a quarterly basis, ending each 30 June, 30 September, 31 December and 31 March. In most cases, the relevant return (known as the BAS) is due on the 28th day of the next calendar month. Although, the BAS for the tax period ending 31 December is due on 28 February. Payment of liabilities reported in the BAS are due at the same time as the return is lodged.

    The Commissioner has the power to grant an extension of time for the payment of tax liabilities. The ATO has released some non-binding guidelines concerning the exercise of the discretion to grant an extension of time (eg in cases where payment cannot be made due to circumstances outside of the taxpayer's control).

    The mere fact that a taxpayer disputes an amount of assessed tax (either through the objection process or through the Courts) does not defer the due date for the payment of tax. The taxpayer will need to rely on the exercise of the Commissioner's discretion discussed above to defer the payment. As an exercise of an administrative discretion, it will be subject to judicial review. Accordingly, a refusal to extend the due date for payment cannot be unreasonable. Further, a tax liability creates a debt which are enforced in the courts of law. A feature of this enforcement mechanism is that a taxpayer may be able to petition the court to stay proceedings for the recovery of the tax obligations. Even where there is a genuine dispute before the Courts about the correctness of an assessment, the Commissioner is generally successful in arguing that those proceedings should not prevent recovery of the tax – the Courts accepting the scheme of the Australian tax legislation that gives prima facie validity to the assessment and prioritises recovery of the tax.

    The Commissioner does offer administrative arrangements which can permit the taxpayer to pay tax liabilities by instalments or enter into '50/50 arrangements' for disputed tax debts.

    Under a 50/50 arrangement, the taxpayer must agree to pay all undisputed tax liabilities, 50% of the disputed tax debt and cooperate fully with the ATO in providing any requested information. In return the Commissioner agrees to defer payment of the unpaid balance of the disputed debt and its related components (eg penalties and interest) until 14 days after the decision in the objection, tribunal or court proceedings determining the dispute. The Commissioner will also remit 50% of the general interest charge that would otherwise accrue in the event the taxpayer is unsuccessful in their dispute proceedings.

  6. Is taxpayer data recognised as highly confidential and adequately safeguarded against disclosure to third parties, including other parts of the Government?

    Provisions in the taxation and privacy laws operate to recognise taxpayer data as highly confidential. These laws impose criminal sanctions on ATO officers that misuse or release that information without authority.

    However, the taxation laws do have some specific exceptions that allow the sharing of taxpayer information in certain circumstances. These circumstances are ordinarily concerned with ascertaining the entitlement of some entity to other government benefits (eg taxpayer data can be shared with the chief executive of the Government health scheme operator, Medicare or for the purposes of administering premium reduction scheme).

  7. Is it a signatory (or does it propose to become a signatory) to the Common Reporting Standard? And/or does it maintain (or intend to maintain) a public Register of beneficial ownership?

    Australia is a signatory and has passed legislation giving effect to the Common Reporting Standard.

    Australia does not presently maintain a public Register of beneficial ownership but Parliament has indicated that it is open to a similar measure.

  8. Are there any plans for the implementation of the OECD BEPs recommendations and if so, which ones?

    Australia has expressed strong support for the OECD's BEPS project and has indicated its intention to incorporate the recommendations into domestic law. However, Australia has yet to make its final decision on adopting the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting which would implement rapid changes to Australia's bilateral agreements to give effect to the BEPs recommendations. Submissions to the government closed on 6 February 2017. Please see the discussion in section 19 for further discussion of BEPS with respect to the Australian transfer pricing regime.

  9. Is there a GAAR and, if so, how is it applied?

    Australia has a GAAR that applies to cancel a tax benefit arising from a scheme that was entered into for the sole or dominant purpose of obtaining that advantage.

    There are numerous processes around the application of the GAAR. Firstly, the ATO has released public guidance, in the form of Practice Statements and public rulings regarding the circumstances in which the GAAR will seek to be applied by the Commissioner and the process around its application.

    In most cases, the application of the GAAR must be authorised by Senior Executive Service (Band 2) level within the ATO. Prior to the application of the GAAR, a review panel will consider the arguments for its application and would also hear submissions on behalf of the taxpayer. This review panel (known as the GAAR Panel) is not a judicial body and does not make a decision that is binding on the ATO. Rather, they are an advisory and review body to ensure appropriate rigour is engaged in the application of the GAAR, given the seriousness of is operation.

    The Australian government has, in recent times, focused particularly on multinational tax avoidance and has enacted or proposed new anti-avoidance provisions, the Multinational Anti-Avoidance Law (MAAL) and the Diverted Profits Tax (DPT) to combat these activities. MAAL is an anti-avoidance provision enacted in 2015 that applies to certain schemes on or after 1 January 2016.

    Broadly, MAAL applies to schemes where:

    • a foreign entity makes a supply to an Australian customer;
    • some or all of the activities directly connected with that supply are undertaken by an Australian entity that is an associate of, or commercially dependent on the foreign entity;
    • the foreign entity derives income from that supply in circumstances where some or all of the income is not attributable to an Australian permanent establishment of the foreign entity; and
    • a principal purpose of the scheme was to obtain a tax benefit.

    MAAL only applies to 'significant global entities'. These are entities that have an annual global income in excess of AUD 1 billion or are members of a consolidated group where the global parent exceeds that threshold. Where the relevant criteria are satisfied, MAAL permits the Commissioner of Taxation to cancel the tax benefit obtained and impose substantial penalties.

    The DPT is a proposal designed to discourage those profits properly produced in Australia from being artificially recognised as the accruing in another jurisdiction to secure a tax advantage. to the DPT will apply to multinationals with global revenue in excess of AUD 1 billion (although it is also expected that there will be some Australian based de minimus thresholds). As currently proposed, the DPT is triggered in circumstances where multinationals enter into arrangements that reduce the amount of tax that would otherwise have been payable by 20% and it is reasonable to conclude that those arrangements were entered into to secure a tax reduction. Where triggered, the DPT will impose a 40% tax on the amount of profits diverted.

  10. Does the tax system broadly follow the recognised OECD Model?

    Does it have taxation of; a) business profits, b) employment income and pensions, c) VAT (or other indirect tax), d) savings income and royalties, e) income from land, f) capital gains, g) stamp and/or capital duties.

    If so, what are the current rates and are they flat or graduated?

    The various tax treaties that Australia negotiates broadly follow the principles described in the OECD Model.

    a. Taxation of business profits

    The corporate tax rate in Australia is at a flat rate of 30%

    b. Taxation of employment income and pensions

    Taxation of employment income is administered by a withholding regime known as 'Pay-as-you-go' (PAYG). PAYG imposes an obligation on an employer to withhold and remit to the ATO, a portion of the salary and wages paid to employees at the each employee's marginal (personal) tax rate.

    For the 2016/17 financial year, the marginal tax rates are:

    Income Marginal Tax Rate
    $0-$18,200 0%
    $18,201-$37,000 19%
    $37,201-87,000 32.5%
    $87,001-$180,000 37%
    above $180,000 47%

    Please note that most taxpayers will be liable for a Medicare levy of 2% that is not reflected in the tax rates described above.

    The taxation of pension income will depend on the nature of the pension. Generally, pension payments (including superannuation annuities) enjoy concessional tax treatment.

    c. VAT (or other indirect tax):

    GST (a broad based consumption tax) is levied at a flat rate of 10%.

    d. Taxation of savings income and royalties:

    Both royalties and interest form parts of a taxpayer's ordinary and statutory income and will be taxed at the relevant income tax rate (corporate or personal).

    Interest and royalties (and dividends) are taxable to non-residents where those income streams have an Australian source. To ensure the collection of those taxes, Australia utilises withholding taxes that will apply to those types of payments unless an exemption applies (eg an exemption under an international tax treaty).

    The rates of withholding tax as at the date of publication are:

    • interest - 10%;
    • royalties - 30%;
    • unfranked dividends - 30%

    These rates may also be reduced for particular countries under the operation of an applicable tax treaty.

    e. Taxation of income from land

    Income from land normally comprises rent or operational proceeds or a capital gain on disposal. Both the income (rent/operational proceeds) and capital gains will be taxed at the relevant income tax rate applicable to the taxpayer. However, timing differences do exist with capital gains only becoming taxable, generally, on realisation of the capital asset (see below).

    f. Taxation of capital gains

    Capital gains form part of a taxpayer's statutory income and will be taxed at the same rate as income as it is ordinarily understood. The principle difference is that capital gains tax is not assessable as it accrues but rather only on the happening of a 'CGT event'. As a general guide, a CGT event occurs upon the realisation of the capital asset.

    Resident individuals, trusts and certain superannuation entities and life insurance companies are eligible for a CGT discount in respect of assets that were acquired at least 12 months prior to the CGT event. Individuals and trusts are entitled to a 50% discount on the gain made. The discount for available to the relevant superannuation entities and life insurance companies is 331/3%. Companies are not entitled to any discount.

    g. Stamp and/or Capital duties.

    Stamp duty is imposed separately by each Australian State and Territory on certain transactions over certain types of property with sufficient territorial nexus to that State or Territory. Stamp duty is calculated by applying the relevant rate to the greater of the consideration paid for and the unencumbered value of the property. The rate of stamp duty varies between jurisdictions and generally is no more than 5.75%, although higher rates may apply to some specific transactions, including transactions involving non-residents..

    Australia does not impose any capital duties.

  11. Is the charge to business tax levied on, broadly, the revenue profits of a business as computed according to the principles of commercial accountancy?

    Business taxation is predicated, fundamentally, on the accounting profits (and losses) of the enterprise. However, the ultimate computation of the business tax liability will be subject to various adjustments that accommodate the timing and characterisation differences between the tax and accounting systems.

  12. Are different vehicles for carrying on business, such as companies, partnerships, trusts, etc, recognised as taxable entities?

    Yes, companies, trusts and partnerships are all recognised commercial vehicles for carrying on business. It should be noted that partnerships will be transparent from a tax perspective unless they are 'corporate limited partnerships'. With some exceptions, a corporate limited partnership is a partnership where the liability of at least one partner is limited (i.e. a limited partnership). In those circumstances, the partnership will be taxed in a manner similar to that of a company.

  13. Is liability to business taxation based upon a concepts of fiscal residence or registration?

    Fiscal residence.

  14. Are there any special taxation regimes, such as enterprise zones or favourable tax regimes for financial services or co-ordination centres, etc?

    None of the listed examples are provided under the Australian taxation system. However, Australia does have some special tax regimes to foster foreign investment in Australia. Of particular relevance are the managed investment trust (MIT), the investment management regime (IMR) and offshore banking unit regime (OBU). These objects and mechanics are briefly outlined below.

    A MIT is an Australian trust that affords concessional tax treatment to foreign investors in respect of passive (non-trading) investment.

    The IMR is provides tax exemptions in relation to gains made by foreign funds in respect of certain qualifying investments. Broadly, funds that are eligible for the IMR concession will not be taxed in relation to gains made on the disposal of shares, loan or derivative securities, although exceptions exist (particularly in relation to non-portfolio indirect taxable Australian real property).

    Offshore banks are offered concessional tax treatment in order to encourage those taxpayers to conduct their banking activities through Australia. Generally, offshore banks will be taxed at an effective rate of 10% for their banking activities in Australia.

  15. Are there any particular tax regimes applicable to intellectual property, such as patent box?

    There is no specific taxing regime affording concessional treatment for the exploitation of intellectual property. However, Australia has implemented a Research and Development Tax Incentive Program offering various tax incentives to encourage investment in innovation.

  16. Is fiscal consolidation employed or a recognition of groups of corporates for tax purposes and are there any jurisdictional limitations on what can constitute a group for tax purposes? Is a group contribution system employed or how can losses be relieved across group companies otherwise?

    A 'head company' (including a corporate limited partnership) and its wholly owned subsidiaries can be consolidated for tax purposes and treated as a single entity. Under that arrangement, dealings between the group members are disregarded from a tax perspective and the head company is responsible for satisfying all the group liabilities to tax that accrue throughout the income year.

    The election is an irrevocable all-or-nothing choice (ie the group must include all wholly owned subsidiaries). The head company must be an Australian resident for tax purposes. Residential requirements for subsidiary members of the group will vary depending on the type of entity (company, trust or partnership).

    As discussed above, the head company is responsible for the group's tax liabilities. Contribution is generally a matter for the entity's internal management. However, if the head company defaults on its tax obligations, the subsidiary members are jointly and severally liable for the entire group liability unless there is an effective tax sharing agreement in place. A tax sharing agreement effectively caps the amount of tax a subsidiary will be responsible for satisfying. Such agreements will only be effective if the entirety of the liability outstanding is allocated and the allocation is reasonable. Commercial practice is to allocate the tax liability according to each member's contribution to the tax liability.

    A separate grouping regime is available for GST purposes. This is a more flexible regime, allowing grouping of 90% owned entities and allowing the decision of whether or not entities should be grouped to be made on an entity by entity basis. This means that GST groups are often different to the consolidated income tax groups.

  17. Is there a CFC or Thin Cap regime?

    Australia operates both a CFC and a Thin Cap regime.

    Broadly, the CFC regime will tax Australian residents ('attributable taxpayers') on their share of the income (including capital gains) of foreign entities in which they hold a controlling interest. The tax treatment will apply even in circumstances where that 'share' has not been distributed to the attributable taxpayer.

    The thin capitalisation rules impose a debt to equity limit of 60:40, subject to certain limited exceptions (eg for genuine securitisation vehicles). The rules will disallow deductions for the outgoings (interest) associated with the debt instruments in excess of that limit.

  18. Is there a transfer pricing regime and is it possible to obtain an advance pricing agreement?

    Australia's transfer pricing regime was substantially reformed following the passage of the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting Act 2013. The new provisions, contained in Subdivisions 815-B and 815-C of the Income Tax Assessment Act 1997 apply to income years starting on or after 29 June 2013. The reforms were designed to bring Australia's transfer pricing rules into alignment with international best practice. Parliament has indicated that the provisions will incorporate the guidance published in the final BEPS report published 2015. However, as at the time of writing, the law still relies on the OCED guidance published in 2010.

    Somewhat controversially, as part of its reform package, the government instituted Subdivision 815-A with retrospective effect. That is, for the years 1 July 2004 - 29 July 2013, provisions incorporating the 2010 OECD guidance will be applied (in addition to the old transfer pricing analysis).

    The changes recalibrate and broaden the transfer pricing analysis. Relevantly, the new provisions focus on the arm's length conditions (as opposed to a mere focus on the consideration paid) that operate as compared with the actual commercial or financial relations.

    Under the old provisions, it was not possible for the Commissioner to depart from the actual arrangement contemplated. Importantly, a different arrangement could not be substituted on the basis that unrelated parties dealing at arm's length would not have entered into the arrangement. That is, where they apply, the old provisions do not empower the Commissioner to recharacterise a transaction.

    The statutory language in the new provisions does not grant the Commissioner a broad ability to recharacterise any particular transaction. However, the focus on 'conditions' is a broader inquiry that recognises that parties can have dealings that are non-arm's length for reasons other than the price attributed to them. On this basis, the Commissioner may depart from the actual conditions that operated in determining whether there has been a transfer pricing benefit (see Chevron Australia Holdings Pty Ltd v. Federal Commissioner of Taxation [2015] FCA 1092 at [600]).

    By way of completeness, the ATO has established an advance pricing arrangement program that allows the taxpayer to reach an agreement with the regulator on the application of the arm's length principle to international related party dealings.

  19. Are there any withholding taxes?

    Australia does operate withholding taxes. The main forms of withholding apply to offshore distributions of dividends, interest and royalties. In 2016 a foreign capital gains withholding tax was introduced for all acquisitions of taxable Australian real property exceeding AUD 2 million.

  20. Are there any recognised environmental taxes payable by businesses?

    Australia does not have a carbon tax or a carbon emissions trading scheme. There are a a variety of different State and Federal environment charges or imposts (and thus “taxes” loosely described). According to recent data these charges account for approximately $26 billion in revenue and consist primarily of taxes on transport and energy.

    At the Federal level, there is an Emissions Reduction Fund (ERF). Unlike most emissions trading schemes, the ERF does not impose a cap on carbon emissions and allow market forces to trade in credits to price carbon ("cap and trade"). Rather, market participants can register projects with the Clean Energy Regulator and will be issued 'Australian Carbon Credit Units' for emission reductions. These credits can be sold to the Government through a competitive reverse auction.

  21. Is dividend income received from resident and/or non-resident companies exempt from tax? If not how is it taxed?

    Australian residents are taxed on their worldwide income. They will therefore be taxed on any receipt of a dividend regardless of the residency of the company in question (although some limited exceptions apply).

    Despite the above, it should be noted that Australia operates an imputation system of dividend taxation. This means that Australian residents utilise credits (franking credits) for the company tax (currently 30%) paid by an Australian resident company. The following example illustrates the operation of this principle. If an Australian resident individual has a marginal tax rate of 49% and receives a fully franked dividend, the tax levied on the distribution received is 19% (49% less 30%).

    Non-residents that receive a dividend distribution from an Australian resident company will be taxed on that income unless an exception applies (eg under a double tax agreement or where tax has been withheld under the dividend withholding tax provisions). However, they are not entitled to use franking credits to offset any taxation.