Tax Treatments and Implications for Foreigners in Australian Agricultural Business

Running head: TAX 1
Australian taxation law
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Introduction
The Australian Taxation Office (ATO) is the one that handles the collection and administration of
Taxes (Stephanie, 2018). In most cases, through taking advantage of any tax concessions and
paying the correct amount on time, Businesses can effectively save money. The Goods and
Services Tax, the company or income tax and the capital gains tax are some of the key taxes set
by the Australian Government and generally affect a number of businesses. It is important to
note that the federal tax system of Australia is relatively complex and comprises of a number of
Territory or state taxes like payroll tax, land tax, and stamp duty tax.
Definition of Foreigners in the Australian taxation law
All entities resident in Australia are subject to income taxation and the application of the
Double taxation agreement is undertaken on the Australian sourced income of nonresidents or
foreigners. It is imperative to note that territory and state taxes are administered generally by
the territory and various state offices and federal taxes are administered by the Australian
taxation office. For instance, in the case of Harding v Commissioner of Taxation, the court made
it clear that tax nonresidence extra cost was in line with the law of the land. This has further
made it difficult for foreign investors (Australia’s Future Tax System. n.d.)
It is very clear that in most jurisdictions, there is the application of foreign purchase surges in
addition to landlord duty and transfer duty. Foreign purchase surcharge duty is imposed by
various states jurisdictions such as Tasmania where there is 0.5 percent for primary production

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property, Queensland, Victoria, south and western Australia at 7 percent. Foreign person land
tax surcharges are also imposed by some jurisdictions (Stephanie, 2018). Though there is a
variation in the definition of a foreign person or business, in general terms; a person who does
not hold a special visa category or permanent visa and is a natural person who is not an
Australian citizen qualifies to be a foreign individual.
Also, in any corporation or business whereby foreigners have fifty percent controlling interest in
form of shares or voting power, it's regarded as a foreign corporation. Further, a business is
regarded as a foreign trust where it has at least fifty percent of the property trust or income,
one or more individuals have specific beneficial interests. Therefore, all supplies that have
Australian connections and are above a given threshold turn over together with Australian
sourced incomes of nonresidents and worldwide income of entities resident are subject to tax
imposition by the Australian Government (SuperGuide, 2019).
It is clear various activities, products and transactions in the Territory Government and
Australian state are subject to taxation. The overall design and structure of the taxes vary
substantially across various jurisdictions. Though there are variations in the overall applications,
there are some similarity tax bases across the territories and states
In countries where Australia has concluded the Double taxation agreement, there is a
limitation in the overall capacity of the Australian Government to impose a tax on nonresidents.
Additionally, their various tax incentives and grants aimed at encouraging investments in the
economy like the innovation companies investors early stage tax concessions, withholding tax
dividend exemption, income derived by offshore banking unit’s concessionary tax rates among

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others. Examples of grants include primary prouder or agriculture, beverage and food,
education, manufacturing and others (Agriculture and food security, 2019)
Agricultural Business
The other term for agricultural Business is agribusiness. Agricultural Business involves
marketing of agricultural products or commodities like crops and livestock, production, farming
and management (Australian Bureau of Statistics,2015). Aspects such as sales, conservation,
resource management, and conservation are all part of agricultural Business. Over the years,
there has been a general debate created by investments in the Australian Agricultural sector.
Foreign companies may be treated as resident businesses if they are incorporated in Australia
and posses the Australian Business number.
Any Business with $250 million turn over and above is considered as a large organization by the
Treasury (SuperGuide, 2019). As per the year 2011, in the agricultural business sector, there
were over eighty-three nonresident investments or organizations with fourteen accounting for
other, 4 public and 65 private. Resident companies for Australians totaled to 133 public entities,
16337 private companies, 33 other companies, 7 nonprofit entities, and eighty-two
cooperatives. Therefore, it is very clear that nonresidents comprise the small percentages of
agricultural business in Australia ( Australian Government,2014).
It is imperative to note that due to the stipulations of Australia’s bilateral free trade agreements
and the double taxation agreements, the overall application of taxation on non-passive incomes
such as royalties, interest, and dividends has not been equal or uniform. The presence of a
branch or permanent establishments is the principal factor in the taxation of Business profits.