Is My Foreign Company an Australian Tax Resident? (2026)

A company incorporated overseas is an Australian tax resident only if it carries on business in Australia and either its central management and control is in Australia, or its voting power is controlled by shareholders who are Australian residents. Central management and control means the high-level decisions (strategy, finance, major contracts, who runs the business), and it sits where those decisions are actually made. Stock in an Australian warehouse does not make a company resident. A director or owner who moves to Australia and runs the company from here can.

The difference is the size of the tax base. A non-resident company is taxed in Australia only on Australian-source income, and if it is from a treaty country, its business profits are generally taxable here only through a permanent establishment. A resident company is taxed on its worldwide income, at 25% or 30%. Nothing about the stock, the customers or the GST registration has to change for a company to cross that line. Only the people do.

	Non-resident company	Resident company
What Australia taxes	Australian-source income only; under a treaty, business profits only through a permanent establishment	Worldwide income
The rate	30%, or 25% for a base rate entity, on what is taxable	30%, or 25% for a base rate entity, on everything
Typical overseas seller with stock in a 3PL	Often no Australian income tax at all	Taxed on UK, EU, US and Australian profit alike
GST	Decided separately: sales connected with Australia, A$75,000 threshold	Same

(General information for FY 2026–27, not advice for your circumstances. Based on ITAA 1936 s 6(1), the ATO’s “Working out your residency” page, Taxation Ruling TR 2018/5 and Practical Compliance Guideline PCG 2018/9, checked 5 November 2026. Worked figures are illustrative.)

1. When is a foreign company an Australian tax resident?

A company is an Australian resident if it is incorporated in Australia, or, if it is incorporated elsewhere, it carries on business in Australia and has either its central management and control in Australia or its voting power controlled by shareholders who are Australian residents. That is the definition in s 6(1) of the Income Tax Assessment Act 1936, and the ATO restates it in the same words.

For a company set up in the UK, the US, China or Singapore, the first limb never applies. Everything turns on the second, and it has two parts that must both be true:

• It carries on business in Australia, and
• either its central management and control (CMC) is in Australia, or shareholders who are Australian residents control its voting power.

The first part is easier to meet than most sellers expect. The Commissioner’s ruling, TR 2018/5, says that “if a company carries on business and has its central management and control in Australia, it will carry on business in Australia”. None of the trading has to happen here. So in practice, for a trading company, the question collapses into one: where is the company’s central management and control?

That is a different question from the GST and ABN tests, and from the ASIC test for registering a foreign company. We untangle all four in carrying on business in Australia. This article is about the residency one.

The voting-power limb matters less for most overseas sellers, because it needs Australian-resident shareholders holding control. It becomes live when a founder who owns the company moves to Australia. Then the question is whether the company carries on business in Australia without its CMC being here, and for a company selling from Australian stock that is genuinely arguable. It is a point to have advised on, not assumed.

A proposed change has been hanging over this test since the 2020–21 Budget, when the government announced that a foreign-incorporated company would be resident only if both its core commercial activities and its CMC were in Australia. At the time of writing that change had not been enacted, and the ATO’s own page says TR 2018/5 and PCG 2018/9 remain its view. This article applies the law as it stands.

2. What is central management and control, and where is it for my company?

Central management and control is the high-level decision-making that directs the company: setting its policies, deciding the direction of its operations and the type of transactions it enters. It sits wherever those decisions are actually made, as a matter of fact, not where the constitution or the board calendar says they should be.

TR 2018/5 separates it from day-to-day management. Shipping orders, answering customers, running ad campaigns, negotiating with a 3PL over storage rates: that is operations, and it can happen anywhere without moving CMC. The decisions that count are the ones above it:

• whether to enter a new market or drop one;
• raising finance, borrowing, and what to do with profits;
• signing or ending major contracts, such as a supply deal or an exclusive distributor;
• appointing and removing the people who run the business;
• approving budgets, large purchases and the company’s overall strategy.

Where the board meets is evidence, not the answer. The leading case is the High Court’s decision in Bywater Investments Ltd v Commissioner of Taxation [2016] HCA 45. The companies there were incorporated and had boards overseas, and their board meetings were held overseas. But the directors did what a man in Sydney told them to. The Court looked through the formal meetings to where the decisions were really made, found that was Sydney, and held the companies were Australian residents.

PCG 2018/9 is the ATO’s practical guide to applying that. Its starting point is the board minutes: who attended, where they were, what was discussed and whether the directors genuinely decided or just signed off. It was revised in November 2023 to add a risk framework with three zones that signals how likely the ATO is to review a company’s residency.

For the typical overseas seller the answer is short. The owner and directors live and decide overseas. The stock sits in an Australian warehouse, an Australian 3PL picks and packs, and maybe an Australian tax agent lodges the BAS. CMC is overseas, and the company is not an Australian resident.

3. What does non-resident for tax purposes mean in Australia, for my company and for me?

It means two different things, decided by two different sets of tests. A company’s residency is decided by the CMC and voting-power tests above. An individual’s residency is decided by four tests of its own: the resides test, the domicile test, the 183-day test and the Commonwealth superannuation fund test. Passing one says nothing directly about the other.

The individual tests are covered in our article on Australian tax residency for individuals. The short version: someone who moves to Australia to live usually becomes resident from the day they arrive under the resides test, whatever their visa says. A non-resident individual is taxed only on Australian-source income, at non-resident rates with no tax-free threshold.

The two tests meet in one person: the founder who moves here. When an owner-director relocates to Australia, two things can change at once:

• They may become an Australian resident individual, taxed on their own worldwide income, including dividends and salary from the overseas company.
• The company may become an Australian resident, if they carry on making its high-level decisions from here.

The second does not follow automatically from the first. A founder can move to Melbourne while a board of directors based overseas genuinely runs the company. But for a one- or two-person seller, where the founder is the board, moving the founder usually means moving the decisions.

4. What happens if my foreign company becomes an Australian tax resident?

A resident company is taxed in Australia on its worldwide income, not just its Australian income, at 30%, or 25% if it is a base rate entity (aggregated turnover under A$50 million and no more than 80% passive income). It has to lodge an Australian company tax return. And because it is usually still resident in the country where it was incorporated, it may be resident in two countries at once.

An illustrative example. Sophie owns a UK limited company that sells homewares in the UK, the EU and on Amazon Australia, with Australian stock in a Sydney fulfilment centre. This year it makes A$400,000 of profit worldwide, A$120,000 of it from Australian customers.

Sophie runs it from Manchester. The company is not an Australian resident. Under the Australia–UK treaty, its business profits are taxable in Australia only through a permanent establishment, and stock in a third party’s warehouse generally isn’t one (see whether FBA stock creates a permanent establishment). Australian income tax: generally A$0. It still deals with GST on its Australian sales, which is a separate question.

Sophie moves to Brisbane and keeps running the company the way she always has: deciding what to stock, which markets to push, when to borrow, all from her home office. The company’s CMC may now be in Australia, and if it is, the company is an Australian resident:

	Run from Manchester	Run from Brisbane
Australian residency	Not resident	May be resident (CMC in Australia)
Profit Australia can tax	Australian profit only through a PE: generally nil	All A$400,000
Australian tax at 25% (base rate entity assumed)	Generally A$0	A$100,000 before foreign income tax offsets
UK position	UK resident	Still UK resident (incorporated there)

Two consequences follow. First, a foreign income tax offset generally reduces the Australian tax for foreign tax paid on the same income, but the offset rules have limits, and timing mismatches between two tax years can leave cash tied up. Second, the company is now resident in both countries. The treaty’s tie-breaker decides which country gets first claim, and for treaties modified by the Multilateral Instrument the two tax authorities may need to agree case by case, with no treaty relief until they do. That is a slow, uncertain process to land in by accident.

5. What can move the central management and control of my company to Australia?

People and decisions move CMC; stock and service providers don’t. A director relocating to Australia, strategic decisions routinely made here, or overseas directors who rubber-stamp what an Australian-based owner decides can each put CMC in Australia. A 3PL, an Australian tax agent, an ABN and GST registration, or a one-off decision made on a visit, on its own, does not.

Generally does not move CMC on its own	Can move CMC
Stock in an Australian warehouse, FBA or 3PL	A sole or majority director relocating to Australia
An ABN and GST registration	Board decisions regularly made by directors sitting in Australia
An Australian tax agent lodging BAS	Overseas directors who follow instructions from someone in Australia (the Bywater pattern)
Australian staff doing day-to-day operations	An Australian “adviser” who in practice makes the strategic calls
A decision made while visiting Australia	A pattern of decisions made while “visiting” for months at a time

If the company is meant to stay non-resident, the practical habits are simple and worth keeping:

1. Hold real board meetings outside Australia and minute them honestly: who was there, where, what was considered and what was decided.
2. Keep the strategic decisions with directors who live overseas, and make sure they actually make them rather than approving what was decided elsewhere.
3. Keep Australian people in operational roles, with written scopes that stop short of strategy, finance and major contracts.
4. Plan any relocation in advance. If an owner-director is moving to Australia, decide before they board the plane whether the company’s control moves too, and restructure on purpose rather than by drift.

Where it’s worth getting help

The free path is real: read TR 2018/5 and PCG 2018/9, look honestly at where your decisions are made, and keep board minutes that match. If your directors live overseas and nobody in Australia makes the calls, the answer is usually clear and stays clear.

Where it goes wrong is the move. A founder relocates for family or a visa, keeps running the company from the kitchen table, and nobody looks at the company’s residency until the ATO does, years later, with worldwide profit, interest and a dual-residency dispute attached. As registered tax agents we review residency before anyone moves: where control sits now, where it will sit after, what the board and minutes need to look like, and whether a different structure fits better. It is a few hours of work up front instead of a reconstruction after the fact.

If you’d like that looked at, our initial assessment scopes it in about twelve questions, including where your directors live and who makes the decisions, without a meeting.

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FY 2026–27. General information, not tax advice for your circumstances. Based on ITAA 1936 s 6(1), TR 2018/5, PCG 2018/9 and Bywater Investments Ltd v FCT [2016] HCA 45, checked 5 November 2026. The 2020–21 Budget proposal to change the corporate residency test had not been enacted at that date. Worked figures are illustrative; treaty outcomes depend on the specific treaty and facts.