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Ned shelton ukti e-commerce webinar - 20 feb 13

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Ned Shelton from Starting in Australia gives tips to British companies thinking of selling products online to Australians.

Ned Shelton from Starting in Australia gives tips to British companies thinking of selling products online to Australians.

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  • 1. UKTI: E-Commerce in Australia – Brits big business 20 February, 9.30am - 10am (UK) By Ned Shelton Managing Director, Starting in Australia Pty Ltd N.Shelton@StartingInAustralia.com.au www.StartingInAustralia.com.au www.SheltonsGroup.com Phone +61 2 9089 8792© Ned Shelton 2013 1
  • 2. ‘Sheltons’ & ‘Starting in Australia’  Sheltons – established in 1994 in Europe  Offices in Denmark, Cyprus and Australia  Areas  Sheltons International Tax Training Institute (Sheltons- SITTI)  Local and international tax  Corporate services  Australian office (Sydney) – not ‘Sheltons’ but ‘Starting in Australia’www.StartingInAustralia.com.au 2
  • 3. Starting in Australia Pty Ltd  Working exclusively with foreigners doing business in Australia – existing and planned  Services  Tax advice & compliance  Legal assistance  Company secretarial  Full range of accounting services, GST & payroll admin  Providing local director, public officer, co secretary  + business advice, intro to trusted partners & suppliers  Specialists – many specific issues affect the inward investor  Independent – work well with your UK accountants and lawyers  Cost efficient – one stop but specialist shopwww.StartingInAustralia.com.au 3
  • 4. E-commerce - phases  Pure export – do nothing  Customs and GST issues  AUD 1,000 exemption – per consignee/addressee  No GST on import if GST-free in Aus (e.g., wheelchairs, food, clothing)  Customs duty important  GST payable at customs clearance – unless arrangement made for monthly/quarterly paymentswww.StartingInAustralia.com.au 4
  • 5. E-commerce - phases  Pure export – use .com.au domain  Need an Australian entity  Does not necessarily cause profits to be taxable in Australia  Useful (in searching), reassuring  Pure export – use .com.au domain + marketing in Australia  Normally still not taxed in Australia on profits– even if have own staff here conducting marketingwww.StartingInAustralia.com.au 5
  • 6. UK vs Australia – company tax Australia – 30% (flat, not progressive) – 2012 - reductions announced then withdrawn – Applies to Aus subsidiary’s profits and to Aus branch’s profits UK – 24% – 23% from 1 April 2013 – small profits rate currently 20%, new SPR to be announced on 20 March 2013www.StartingInAustralia.com.au 6
  • 7. Branch (‘permanent establishment’) UK ABC Ltd ABC Ltd has a branch in Aus Australia Branchwww.StartingInAustralia.com.au 7
  • 8. Branch (‘permanent establishment’)  Do you have a branch (‘Permanent establishment’ (PE)) in Australia – deliberately – or accidently? It matters.  ‘A branch’ – general term, often used in the context of company law  ‘Permanent establishment’ (PE) – a tax term  If UK business has a PE in Australia – taxed in Australia on the ‘business profits’ (i.e. trading profits) attributed to the PE  PE arises if there is a certain type of physical presence in Australiawww.StartingInAustralia.com.au 8
  • 9. Branch (permanent establishment)  Examples of a PE in Australia (i.e. gives rise to 30% Australian tax on the profits):  An office generally trading / carrying on business  Selling through an (unrelated or related) agent who is mainly working for the UK principal  UK business ‘has a building site or construction or installation project in [Australia] or supervisory or consultancy activity [in Australia] connected with such a site or project, but only if that site, project or activity lasts more than 12 months;’  Example of no PE (no Australian tax):  Export to Australia via unrelated importer  Sales rep who simply introduces customers to the UK business head office  Renting a warehouse (for storage and delivery of your goods)www.StartingInAustralia.com.au 9
  • 10. UK tax – re Australian branch  The profits from an Australian PE are most likely exempt from tax in the UK if UK business is a UK company  What is best – to have a PE in Australia or not?  UK corporate tax - lower than Australian tax  Thus: best to not be taxed in Australia – thus only pay 23% or less in UK – rather than 30% in Australia  Also: not being taxed in Australia means reduced tax compliance burden in Australia, avoids ‘discussions’ on transfer pricing, etc.  (If the Australian tax rate was less than the UK, best to have a PE here)www.StartingInAustralia.com.au 10
  • 11. Australian subsidiary UK ABC Ltd ABC Ltd has a subsidiary in Aus Australia ABC Pty Ltdwww.StartingInAustralia.com.au 11
  • 12. UK tax - with Australian subsidiary  30% corporate tax (flat, no progression)  Profits calculation roughly similar to UK company  No dividend withholding tax on the distribution of the 70 (i.e. 100 less tax of 30)  UK Co potentially not taxed on the dividend of 70 received (exemption method)  Thus: from the 100 pre-tax Aus profits, UK Co receives 70 cash > UK tax (of nil)  Gain on sale by UK Co of shares in Australian subsidiary – potentially exempt in the UKwww.StartingInAustralia.com.au 12
  • 13. No PE vs. PE; PE vs. subsidiary  UK corporate owner, tax aspects:  No PE preferred – slightly less tax in total – and no/less Australian tax compliance burden  PE vs. subsidiary – little difference (30% Aus tax in both cases, probably no UK tax on dividend from sub or PE profits)  UK corporate owner, non tax aspects:  Far easier to do business in the form of a subsidiary – if significant interaction and transactions in Australia (e.g. employing staff, renting property, marketing, interaction with local customers)  Running a business with no branch (PE) or with a branch – cumbersome  Costs (legal, tax, accounting) – best to have no PE; PE vs. subsidiary: about equal  Depends on the casewww.StartingInAustralia.com.au 13
  • 14. Forming & running an Australian company  Can be formed in a day / on the spot  No minimum share capital needed  Must have  an Australian resident director (company law) and  an Australian resident public officer (tax law)  Strict responsibilities for both  Small companies do not need to prepare financial statements or be audited  Must always file tax returns  GST (= VAT) quarterly for small companieswww.StartingInAustralia.com.au 14
  • 15. Thank you,that’s all forthis time!© Ned Shelton 2013 15