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Foreign firms face Aussie tax slug

AAP logoAAP 15/11/2016

High Court judges have unanimously ruled that four companies variously incorporated in the Cayman Islands, Bahamas and Samoa, and ostensibly controlled by a Swiss businessman, have to pay Australian tax.

The High Court heard the four firms, Bywater Investments, Chemical Trustee, Derrin Brothers Properties and Hua Wang Bank Berhad, made big profits from trading in shares of firms listed on the Australian Stock Exchange.

Judges agreed with the Australian Taxation Office that they were actually controlled by a Sydney-based accountant within the meaning of the Income Tax Assessment Act and were thus liable for more than $13 million in tax.

The four companies appealed to the High Court after the Federal Court found the role of Swiss-based director Peter Borgas, who runs a corporate services business, was fake and that all were controlled by Sydney accountant Vanda Gould.

High Court judges agreed, finding no reason to doubt those findings.

They said as a matter of long-established principle, the residence of a company for tax purposes was determined by where central management and control actually occurred, not by its formal structure.

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