AUSTRALIA

Source: IMF, International Financial Statistics, June 2021.

• The Australian central bank is the Reserve Bank of Australia (RBA - www.rba.gov.au).

Bank supervision

• Australian banks are supervised by the Australian Prudential Regulation Authority (APRA – www.apra.gov.uk)

• Per-item-based charges are applied on payments between resident and non-resident bank accounts.

• Credit transfers are available as both paper-based and electronic payment instruments.
• Credit transfers are used by companies to pay salaries and suppliers, and for treasury payments.
• High-value and urgent domestic AUD-denominated credit transfers can be settled in real time via the HVCS.
• Low-value, non-urgent and bulk AUD-denominated credit transfers are settled on a intraday-day basis via BECS or via the NPP.
• Low-value credit transfers can also be processed in real time via Osko, delivered by BPAY, which uses the NPP infrastructure.
• Paper-based credit transfers are processed via the APCS and manually exchanged on a next-day basis.
• Direct credit payments grew by 3.2% in 2022/23. Value of payments increased by 5.9%.
• Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad.

• Direct debits are used for regular payments, such as utility bills.
• Direct Debits are settled on a same-day intraday basis.
• Direct debit volumes grew by 4.9% in 2022/23. Value of payments increased marginally to AUD 4.4 trillion.

• The cheque is not a common cashless payment instrument, accounting for less than 0.1% of the total of non-cash payments in 2023. The Australian Government is phasing out cheques in Australia by 2030.
• Cheques are cleared via the APCS. Final settlement takes place via RITS with funds typically available to beneficiaries within three days.
• Total cheque payments continues to fall year on year and fell by 14% in 2022/23 to 25 million transactions, value fell by 14% to AUD 290
  billion.

• Card payments are the most frequently used payment method.
• In 2022/23, card transactions grew by 14% year on year, to 14.2 billion.
• There were 46 million debit and 17 million credit and charge cards in circulation in 2023.
• In 2022/23 94% of in-person card payments were contactless. 1 in 3 in-person card payments were made with a mobile device.
• Visa and MasterCard-branded cards are the most widely issued.
• American Express, Diners Club and JCB credit cards are also available.
• Most debit cards are proprietary cards operating via the national EFTPOS system.
• Credit card payments are cleared via their respective international scheme.
• Proprietary debit card payments are cleared by the Issuers and Acquirers Community (IAC). Scheme debit card payments are cleared by Visa or MasterCard.
• All cards issued have EMV chips.

• There were 24,695 ATMs in Australia at the end of June 2023.
• There were 962,347 POS terminals in Australia at the end of June 2023.
• Proprietary debit card payments are settled via IAC.
• Visa and MasterCard card payments are settled by the relevant card issuer.
• All POS terminals are EMV-compliant.

• The dominant electronic wallet schemes in Australia are pre-paid cards.
• 15.3 million cards were registered to mobile wallets in 2022.
• 2.4 billion wallet transactions processed in 2022.
• 60% of e-commerce payments are made using mobile wallets.

• BNP Paribas Global Trade Solutions’ (GTS) team in Australia comprises 3 trade professionals. This team finances significant flows in the Pacific corridor, and services the leading players in the natural resources sector. 

• Australia has signed a number of free trade agreements. In November 2020, Australia signed the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement.
• Australia is a member of the ASEAN–Australia-New Zealand Free Trade Area (AANZFTA). ASEAN comprises Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
• Australia is conducting a number of FTA negotiations, including with the Gulf Cooperation Council (GCC) and the European Union. The country is also holding prospective FTA negotiations with the UK.
• Australia is a signatory of the Pacific Trade and Economic Agreement (PACER Plus) alongside New Zealand and 14 members of the Pacific Island Forum, under which imports from the Pacific Islands are subject to non-reciprocal preferential duty rates under the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA). PACER Plus came into force on December 13, 2020.
• Australia and ten other Pacific Rim countries have signed the renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
• Australia is a signatory of the Regional Comprehensive Economic Partnership (RCEP).

Source: IMF, International Financial Statistics, July 2020.

• Licences are required when importing certain primary commodities and dangerous items.

• Tariffs vary according to the nature of the item.
• The maximum customs tariff for most manufactured goods is 5%.
• Most agricultural products are free from tariffs.
• Tariffs are not placed on imports from the world's least developed countries.

• None.

• None.

• Prohibited imports are published on a negative list.

• Trade permits are required when exporting nuclear and nuclear-related items, radioactive materials, livestock and meat.

• None.

• None.

• Export Finance Australia is Australia’s official export credit agency, providing state-supported export credit insurance.
• Export credit insurance and financing are available from private companies.

• Exports are prohibited in line with international treaty obligations.

• Australia does not apply exchange controls.
• Capital controls are applied. This usually involves the notification of any sale of securities to non-residents to the relevant Australian regulator.
• Restrictions apply to inward investment funds in specific areas (financial services, telecoms and media, aviation and shipping, for example).

• There are no specific financial transactions/banking services taxes.

• Please contact your tax advisor for further information.

• Please contact your tax advisor for further information.

• The ATO can issue public and private rulings. Rulings generally are binding on the ATO where they apply to a taxpayer and the taxpayer relies on the ruling by acting in accordance with the ruling. Public rulings may apply to all entities or a class of entities, either generally or in relation to a particular arrangement. The ATO will issue a private ruling on the tax consequences of a specific scheme at a taxpayer's request. However, only the taxpayer requesting the private ruling can rely on it. The ATO also operates an advance pricing arrangement programme, under which taxpayers can obtain certainty on the application of the arm's length principle to their cross-border dealings with related parties.

• Assessable income includes any capital gains after offsetting capital losses. Net capital gains derived by companies are taxed at the 30% corporate rate. Australian tax residents (excluding temporary residents) are liable for tax on worldwide capital gains (subject to double tax relief). Where a company holds a direct voting interest of 10% or more in a foreign company for a certain period, any capital gain or loss on the sale of the shares in the foreign company may be reduced (see Participation exemption). Foreign investors include capital gains in assessable income only for assets that are ‘taxable Australian property’ (e.g. the business assets of Australian branches or non-residents and direct and indirect interests in Australian real property).

• * Reduced to 15% for dividends and 10% for royalties under most tax treaties.
• ** Dividends are referred to as ‘fully franked’, ‘partially franked’ or ‘unfranked’ depending on the extent that a company has chosen to use its franking credits. Dividend payments are exempt from dividend withholding tax to the extent that they are franked, which may be reduced under a tax treaty.
  • Fund payments made to foreign residents by an MIT are subject to withholding at 15% when made to a foreign resident in a country which has an EOI agreement with Australia; otherwise, withholding is required at a rate of 30%.

• Australia has concluded over 40 tax treaties.
• Australia is a signatory of the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI entered into force on 1 January 2019.

• Interest deductions claimed against Australian assessable income for both foreign-controlled Australian investments (inward investors) and Australian entities investing overseas (outward investors) are restricted where an entity’s debt exceeds a certain prescribed level. The maximum allowable debt generally is determined by applying one of the following tests:

   

  • For both inward and outward investors, under the safe harbour test, the prescribed debt-to-equity ratio is broadly 60% of total assets less non-debt liabilities and certain related party investments/receivables, as disclosed in the accounts. A separate test applies for financial institutions;
  • For both inward and outward investors, under the arm’s-length debt test, the prescribed level of debt is the maximum amount of debt the entity could reasonably have borrowed from commercial lending institutions; and
  • Separate worldwide gearing tests are available to inward and outward investors.
• The rules apply to total debt, rather than just related-party foreign debt, and cover Australian multinational companies, as well as foreign multinational investors. Taxpayers, who together with their associates, have interest deductions of less than AUD 2 million or outward investing entities with 90% or more of their total average value of assets consisting of Australian assets, are exempt from the rules.

• The transfer pricing rules may apply to any international transactions and do not necessarily require direct ownership between the two transacting parties (i.e. any connection between the parties is all that is required). The rules apply to international transactions/dealings between separate legal entities, as well as permanent establishments. Covered cross-border transactions include those involving tangible or intangible property, the provision of services and financing. The commonly accepted transfer pricing methods in Australia are the comparable uncontrolled price, resale price, cost plus, profit split and transactional net margin methods, out of which the most appropriate and reliable method should be applied. The ATO has powers to adjust the pricing of transactions that are considered not to be at arm’s length. See also Disclosure requirements and Rulings.

General anti-avoidance

• Australia operates a general anti-avoidance rule (GAAR) that supplements other specific anti-avoidance rules. The GAAR is a provision of last resort and applies where there is a scheme, the sole or dominant purpose of which is to obtain a tax benefit.
• The Multinational Anti-Avoidance Law (MAAL) targets the avoidance of permanent establishment status in Australia by foreign entities. Broadly, the MAAL will apply where a foreign entity supplies goods or services to Australian customers, an Australian affiliate performs activities in Australia directly in connection with those supplies and there is a relevant “principial purpose” to obtain a tax advantage.
• A 40% diverted profits tax (DPT) applies to SGEs, on profits transferred offshore through related-party transactions. All cross-border related party transactions where the relevant income is subject to foreign tax at a rate less than 24% potentially are within the scope of the DPT.
• Broadly, the DPT can apply in certain circumstances if a tax benefit is obtained in connection with a scheme and it can be concluded that the scheme, or any part of it, was entered into for the principal purpose of enabling a tax benefit to be obtained. There are limited carve-outs for nonapplication of the DPT. One such exemption is the “sufficient economic substance” test which tests whether the profit of each relevant entity reasonably reflects the economic substance.

• The states and territories impose stamp duty at rates of up to 5.95% on the transfer of real property and other business property. Rates vary depending on the state/territory and class of business property transferred.
• Stamp duty also is imposed on the indirect transfer of real property held by certain companies and unit trust schemes, at rates of up to 5.95%.

• There are no specific tax rules that apply to cash pooling arrangements, but the following tax provisions may be relevant: interest-withholding tax, thin capitalisation, and goods and services tax. General transfer pricing principles apply to the allocation of intra-group interest.
• In relation to notional pooling or sweeping in Australia, an interest-withholding tax rate of 10% will apply to interest 'paid' by the Australian borrower to non-resident companies.
• The tax implications of cash concentration and zero/target/threshold balancing are similar to notional pooling.

• There are no specific financial transactions/banking services taxes.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (www.deloitte.com).