Carrying On Business in Australia: What the ATO Actually Tests (2026)
Part of the guide: Do I need to register?
The phrase “carrying on business in Australia” is not one legal test. It is four — in the GST law, the Corporations Act, the residency rules and the income tax treaties — and none of them shares a definition with the others. A typical overseas seller fails all four. It still needs an ABN and GST registration, because the ABN law has a second door that has nothing to do with carrying on business here at all.
That is the whole article in a paragraph, and it matters because the sentence “you’re carrying on business in Australia, so you have to register” is the most common thing overseas sellers are told — usually by someone who hasn’t said which law they mean. Answer the GST question with the ASIC test, or the residency question with the treaty test, and you’ll register for things you don’t need and describe yourself in ways that create problems you didn’t have.
| The test | The instrument | What it asks |
|---|---|---|
| GST / ABN | GST Act s 9-27; LCR 2016/1 | Is the enterprise carried on through people in Australia at a fixed place or for 183 days? |
| ASIC | Corporations Act ss 21, 601CD | Does the foreign company have a place of business here — outside the exclusion list? |
| Residency | ITAA 1936 s 6(1); TR 2018/5 | Is the company’s central management and control in Australia? |
| Income tax | ITAA 1936 s 6(1); treaty Art 5 | Is there a permanent establishment? |
(General information for FY 2026–27, not tax advice for your circumstances. The GST provisions and rulings below were read on 6 October 2026 from the ATO legal database — GST Act s 9-27, LCR 2016/1 and TR 2018/5; the Corporations Act provisions as verified for our ARBN article; the permanent establishment rules as set out in our PE explainer. All four tests are fact-specific.)
1. What does “carrying on business in Australia” actually mean — and why is there no single test?
Because four different laws use the words for four different purposes, and each wrote its own test. The GST law wants to know whether to treat you as an Australian-based enterprise. ASIC wants to know whether you need a registered presence here. The residency rules want to know whether to tax your worldwide income. The income tax treaties want to know whether Australia may tax your business profits at all.
Those are four different questions, so it would be strange if one test answered them. It doesn’t. What’s confusing is that the vocabulary overlaps — “carrying on business”, “enterprise”, “place of business”, “agent” — and overseas sellers are routinely handed a conclusion from one regime as if it settled the others.
The practical consequence is a scorecard. For a typical overseas seller — run from abroad, stock in a third-party warehouse, selling through its own website or a marketplace, with nobody in Australia acting for it — the honest result on all four tests is no. And the seller still has Australian obligations. The rest of this article explains each test and then puts one seller through all four.
2. The GST and ABN test: when is an enterprise “carried on in Australia”?
The GST law answers this with a definition that is precise enough to quote. Section 9-27 says an enterprise is carried on in the indirect tax zone only if it is carried on by certain people who are physically in Australia, and through a fixed place or for more than 183 days in a year.
The full test:
An enterprise of an entity is carried on in the indirect tax zone if: (a) the enterprise is carried on by one or more individuals covered by subsection (3) who are in the indirect tax zone; and (b) any of the following applies: (i) the enterprise is carried on through a fixed place in the indirect tax zone; (ii) the enterprise has been carried on through one or more places in the indirect tax zone for more than 183 days in a 12 month period; (iii) the entity intends to carry on the enterprise through one or more places in the indirect tax zone for more than 183 days in a 12 month period.
And the people who count — the “relevant individuals”, in the ATO’s phrase — are listed in subsection (3): the entity itself if it’s an individual; “an employee or officer of the entity”; or “an individual who is, or is employed by, an agent of the entity that: (i) has, and habitually exercises, authority to conclude contracts on behalf of the entity; and (ii) is not a broker, general commission agent or other agent of independent status that is acting in the ordinary course of the agent’s business as such an agent.”
Three things follow for an overseas seller.
A warehouse is not a relevant individual. A 3PL or a marketplace fulfilment centre is an independent service provider acting in the ordinary course of its own business. It is not your employee, and it has no authority to conclude contracts for you. Your enterprise is not carried on in Australia through it. The Commissioner’s ruling, LCR 2016/1, calls the combined test a “GST enterprise presence”, and a seller with no people here has none.
The place test is loose; the people test is strict. Section 9-27(2) says it “does not matter whether the entity has exclusive use of a place” or owns or leases it, and the ruling confirms the 183 days need not be consecutive. So you can’t escape by not signing a lease. But none of that matters unless a relevant individual is in Australia first.
This is why hiring changes everything. The day you engage someone in Australia who habitually concludes contracts in your name, subsection (3)(c) is satisfied, their desk is a place, and the 183-day clock is running. Section 5 shows the flip.
The two doors to an ABN
Here is the part the “you’re carrying on business here” crowd gets wrong, and it’s the point of this article. You don’t need to pass the s 9-27 test to need an ABN or to be liable for GST. The ABN law grants entitlement on two alternative grounds: carrying on an enterprise in Australia, or making supplies connected with Australia in the course of an enterprise carried on anywhere. Either limb is enough on its own.
Goods delivered from stock in an Australian warehouse are supplies connected with Australia (GST Act s 9-25). So the typical seller walks through the second door: not carrying on an enterprise in Australia, entitled to an ABN anyway, and required to register for GST once connected sales reach A$75,000 — standard registration, because warehoused goods rule out the simplified kind. Our article on whether foreign companies pay tax in Australia sets out the registration mechanics.
Which door you use is not a technicality. A seller who describes itself — on an application, a website, an invoice — as “carrying on business in Australia” has volunteered a conclusion under the other three tests that the facts don’t support. The accurate description is the second limb: my supplies are connected with Australia. It gets you the ABN and the GST registration without conceding anything about ASIC, residency or a permanent establishment.
3. The ASIC test: when must a foreign company register?
The Corporations Act prohibits a foreign company from carrying on business in Australia unless it is registered with ASIC (s 601CD) — and then defines the phrase, in section 21, with a short list of what counts and a longer list of what doesn’t.
What counts: a foreign company with a place of business in Australia carries on business here, and is deemed to if it uses a share transfer office here or deals with Australian property as agent or trustee.
What is expressly not carrying on business “merely because” the company does it — s 21(3):
- effects a sale of property through an independent contractor;
- solicits or procures an order that becomes a binding contract only if accepted outside Australia;
- maintains a bank account;
- is or becomes a party to legal proceedings;
- holds directors’ or members’ meetings;
- creates evidence of a debt, or secures or collects its debts;
- conducts an isolated transaction completed within 31 days and not repeated;
- invests funds or holds property.
Read the first two items against the marketplace or own-website model: sales fulfilled by an independent 3PL or platform, and orders accepted by the seller’s systems overseas. That is the pattern the exclusions were written for. Beyond the list, the courts ask whether activity is ongoing, systematic and repetitious with a territorial connection; preparatory steps and genuinely independent intermediaries fall short.
Where it does bite is the same place the GST test bites: a representative in Australia habitually concluding contracts from premises here is a place of business, and the orders no longer become binding only offshore. Our article on ARBN and ASIC registration works through the exclusions in detail and the “register anyway, it looks more legitimate” trap.
One thing to be clear about: this is a different statute with a different purpose from the tax tests. ASIC registration says nothing about your GST, residency or income tax position, and the reverse is also true. Passing or failing one does not decide another.
4. The residency test: when is a foreign company an Australian resident?
A company not incorporated in Australia is still an Australian resident if it carries on business in Australia and its central management and control is here. The Commissioner’s ruling makes the first half almost automatic once the second is met: “If a company carries on business and has its central management and control in Australia, it will carry on business in Australia.”
TR 2018/5 goes further, and this is the paragraph to remember:
It is not necessary for any part of the actual trading or investment operations of the business of the company to take place in Australia. This is because the central management and control of a business is factually part of carrying on that business. A company carrying on business does so both where its trading and investment activities take place, and where the central management and control of those activities occurs.
So under this test, “carrying on business in Australia” means something close to the opposite of the GST and ASIC tests. There, what matters is operational presence — people, places, orders. Here, what matters is where the high-level decisions are made: the ones that “set the company’s general policies, and determine the direction of its operations and the type of transactions it will enter”. The ruling adds that this “is not necessarily exercised where the trading or investment activities of the company are carried on”.
For a seller run from Hamburg, Singapore or Austin, with stock in Sydney and an Australian customer base, the residency answer is straightforward: the trading happens here, the control doesn’t, and the company is not an Australian resident. It is taxed only on Australian-source income — and under a treaty, only through a permanent establishment.
The trap runs the other way. A company incorporated in Delaware or Hong Kong but run by a founder living in Melbourne is carrying on business in Australia on this test regardless of where the stock sits, and is an Australian resident taxed on worldwide income. That is a different article, and it’s the one case where the words “carrying on business in Australia” are true of a seller with no operational footprint here at all.
5. The income tax test — and what a typical overseas seller is on all four
For income tax, the question is whether you have a permanent establishment: a place at or through which you carry on business, with both geographic and temporal permanence. Our PE explainer covers the definition, the six-month guide and the exclusions in full. For this article, one point: the treaties expressly exclude a warehouse used solely to store, display or deliver your own goods, and expressly include a dependent agent who habitually concludes contracts — which is almost word-for-word the GST law’s “relevant individual”.
Now put one seller through all four.
Lena runs a German company selling homewares into Australia: A$500,000 of annual sales, stock in a Sydney 3PL, orders through her own website, central management and control in Hamburg, nobody in Australia acting for her.
| Test | Lena, as she is | Lena, after hiring Tom |
|---|---|---|
| GST / ABN (s 9-27) | No relevant individual in Australia — the 3PL is an independent provider. Enterprise not carried on here. ABN via the second door (supplies connected with Australia); standard GST registration; A$45,455 remitted on A$500,000 | Tom habitually concludes contracts from a Melbourne desk: s 9-27(3)(c) + a fixed place. Enterprise now carried on here. GST outcome unchanged — she was already registered |
| ASIC (s 21) | No place of business; sales through an independent contractor; orders accepted in Hamburg. Not carrying on business. No ARBN | An agent concluding contracts from Australian premises; orders binding here. Likely carrying on business. ARBN |
| Residency (TR 2018/5) | CM&C in Hamburg. Not resident | CM&C still in Hamburg. Still not resident |
| Income tax (treaty Art 5) | 3PL used solely for storage and delivery. No PE. A$0 Australian income tax | A dependent agent with authority. PE. Attributable profit taxed at 30% |
| Score | 0 of 4 — and still ABN + GST | 3 of 4 |
Two things in that table are worth holding onto.
First, the left column is the normal position for an overseas seller, and it is internally consistent: not carrying on business in Australia on any test, no ARBN, no residency, no PE, no Australian income tax — and a full GST registration on an ABN, because the second door doesn’t ask the question. There is no contradiction in “I don’t carry on business in Australia” and “I’m registered for Australian GST” sitting on the same form. That’s how the law is built.
Second, one hire flips three of the four, and the one that doesn’t flip is the one people assume would. Tom doesn’t move central management and control — Lena still sets policy from Hamburg — so the company stays foreign. But he creates a GST enterprise presence, very likely an ASIC place of business, and a permanent establishment, all through the same fact: a person here with authority to conclude contracts, who does.
Where it’s worth getting help
If you’re run from abroad, your stock is in a third-party warehouse and nobody in Australia signs for you, the four tests are written for you and you can read them: a 3PL is not a relevant individual, not a place of business and not a permanent establishment, and your ABN comes through the second door. Many sellers do exactly that.
The judgment calls are the ones that move you across a row of the table:
- Is anyone in Australia acting for you? A contractor, a country manager, a family member — what they’re authorised to do and whether they do it is the same question in s 9-27, s 21 and the treaty, and it tends to flip all three at once.
- Where is the company actually run from? A founder relocating to Australia changes the residency answer without touching the stock.
- What have you written on forms and websites? “Carrying on business in Australia” is a conclusion under four laws. If it’s only true under none of them, don’t volunteer it.
- Non-treaty country? The income tax test falls back to source and the domestic PE definition, which is wider.
That’s the difference between doing it and doing it right the first time: the seller who ticked “carrying on business in Australia” on an ABN application because someone said they had to, and then spent a year explaining to ASIC and the ATO why three other things weren’t true.
If you’d like that looked at properly, our initial assessment form scopes it in about twelve questions — who acts for you here, where the company is run from, and where your stock sits — without needing a meeting.
FY 2026–27. General information, not tax advice for your circumstances. Each of the four tests is a question of fact and degree. Provisions quoted are the published settings as at 6 October 2026; the A$75,000 GST registration turnover threshold is not indexed — confirm the current figure.
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