Private ruling: Permanent establishment
Date of advice: 18 February 2021
Published: April 2021

Ruling: Q1: Does Foreign Co have a permanent establishment in Australia in respect of the delivery of the Project under Article 5 of the Double Tax Treaty between Australia and Country Z (Country Z DTA)? | A1: Yes. | Q2: Does Foreign Co have a permanent establishment in Australia in respect of the activities undertaken in connection to the Proposed Project under Article 5 of Country Z DTA? | A2: No. | Q3: Does Foreign Co have a permanent establishment in Australia in respect of the delivery of the Project under subsection 6(1) of the Income Tax Assessment Act 1936 ? (ITAA 1936)? | A3: Yes. | Q4: Does Foreign Co have a permanent establishment in Australia in respect of the activities undertaken in connection to the Proposed Project under subsection 6(1) of the ITAA 1936? | A4: No.

Relevant facts and circumstances: Foreign Co is a resident of Country Z and not a resident of any other country for tax purposes. Foreign Co develops and supplies solutions for customers in certain industries. One such solution is a software system - the Project Australian Co is a resident of Australia and not a resident of any other country for tax purposes. Australian Co is wholly owned by Foreign Co. Australian Co has entered into service contracts with an unrelated Australian entity, (the client) to install the software system, the Project - referred to as Contract B . Australian Co has offices located in two Australian cities - City A and City B. Under various contractual arrangements, Foreign Co has also been engaged to perform work delivering the Project for the client pursuant to Contract Z . Foreign Co is the proprietary owner of the intellectual property for the Project. Subcontract arrangements - Provision of Foreign Co's employees to Australian Co Australian Co has subcontracted parts of the work of Contract B to Foreign Co. Australian Co does not have the resources to solely deliver Contract B and is therefore supported by Foreign Co in relation to the provision of employees and intellectual property. Foreign Co has invoiced Australian Co since 20xx income year for personnel costs. Foreign Co generally provides one employee in City A and one employee in City B to Australian Co. These employees are on a 90-day rotation and are not permanently based in Australia. These employees provide certain training and advisory services in relation to the fulfilment of Contract B. There is no set roster for these rotations. Employees of Foreign Co work mainly from the client 's premises which are also located in City B and City A. They also work at the offices of Australian Co in these cities. Foreign Co employees have business spaces made available at the client's premises and Australian Co offices in each city to deliver Contract B. However, the client does not provide any dedicated offices or workstations to Foreign Co employees working to deliver the Project under Contract B at the client premises. The client supports the domestic Australian Co employees who have dedicated workstations. Foreign Co's personnel working at the client's premises are provided with access to the client's facilities by the client and access to its IT systems. Foreign Co personnel carry Foreign Co owned resources (eg company computer or company phone) on travel to Australia. Apart from some short periods of time, Foreign Co's employee(s) have been continuously present in each City working on Contract B for several income years. There is no intercompany rental charge between the Foreign Co and Australian Co. The Project - Contract Z As mentioned earlier in this document, Foreign Co has been engaged to perform work directly for client pursuant to Contract Z. In delivering Contract Z, Foreign Co requires its employees to travel to Australia to undertake such activities as engineering reviews or planning activities. Several employees of Foreign Co travelled to Australia every two to three months to perform work on Contract Z over several years. The duration of the employees' stay in Australia for this contract was generally limited to one or two weeks. Whilst in Australia, these employees primarily worked from the client's premises that are located in City B. At the client's premises, Foreign Co personnel used non-dedicated workstations to conduct such activities as engineering reviews. As mentioned earlier, accommodation at the client's premises is only provided to Australian Co employees who are provided with dedicated workstations at these premises. Additionally, Foreign Co employees would also spend time at the City B office (or City A office) of Australian Co. This could occur a couple of times a week but intermittently, as it depended on the needs of the client. The client provides working accommodation for Foreign Co employees when there was a need for a Foreign Co employee to be working at the client's premises. When there is no requirement for a Foreign Co employee to be working at an the client's premises, the employee will go to one of the Australian Co office locations to work. This is done for convenience purposes only, instead of working in an hotel room. No designated offices or workstations are provided to Foreign Co employees by Australian Co whilst they are performing their work at the relevant Australian Co office on Contract Z. Further, no other dedicated resources are provided to Foreign Co employees by Australian Co. Foreign Co employees carry a Foreign Co-provided laptop and a personal or company provided mobile phone. Other infrastructure is provided at Australian Co offices such as guest spaces or spaces available (e.g conference room chair) for Foreign Co employees to work from. The Foreign Co employees do not have free access to the facilities of Australian Co and are not given access passes to either the City A or City B offices of Australian Co. The Project - Other Business Development Activities Foreign Co employees also travelled to Australia for the purpose of attending business development and customer meetings in relation to the Project for some of the income years. These meetings and discussions were held at a mixture of the client premises and the offices of Australian Co in City A and City B. One to two employees travelled to Australia every two to three months over approximately two years. Employees stayed in Australia generally for one to two weeks. Other activities of Foreign Co - Proposed Project In addition, Foreign Co's employees travelled to Australia during the income years in question to pursue other business development opportunities which are not connected to the Project. These business development activities were in relation to a new project - Proposed Project. Employees attended meetings to understand the technical requirements of Proposed Project, to see if Foreign Co would be able to support this project. The meetings for the new project were held mainly at the business premises of other unrelated third parties or independent parties which were held in a number of Australian cities. Neither Foreign Co nor Australian Co are currently under contract for Proposed Project.


Reasons for decision: Summary: For the purposes of Country Z Convention, the term 'permanent establishment' is defined in Article 5 to mean a fixed place of business through which the business of an enterprise is wholly or partly carried on. Examples of a permanent establishment are a place of management, a branch, an office or a workshop, a building site or construction, assembly or installation project which exists for more than 12 months. Paragraph 3 of Article 5 also provides that a Country Z enterprise shall not be regarded as having a permanent establishment solely as a result of, amongst other things, maintaining a fixed place of business for the purposes of activities which have a preparatory or auxiliary character, such as advertising or scientific research, for the enterprise. In Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements, (TR 2001/13) the Commissioner accepts that in interpreting the wording of a tax treaty, it is appropriate to have reference to the OECD Commentary on the Model Tax Convention on Income and on Capital 2017 ('the OECD Commentary'). Paragraph 6 of the OECD Commentary on Article 5 explains that the Model Convention's definition of 'permanent establishment' contains the following conditions: • the existence of a 'place of business', i.e. a facility such as premises or, in certain instances, machinery or equipment; • the place of business must be 'fixed', i.e. it must be established at a distinct place with a certain degree of permanence, and • the carrying on of the business of the enterprise through this fixed place of business. This means usually that persons who, in one way or another, are dependent on the enterprise (personnel) conduct the business of the enterprise in the State in which the fixed place is situated. Each of these conditions and their application to the activities undertaken by Foreign Co employees working on the Project is discussed below. The application of each of these conditions to the activities undertaken in respect of Proposed Project is considered later in this 'Reasons for Decision'. First Condition - Existence of a place of business The OECD Commentary, at paragraph 10, provides that the term 'place of business' covers 'premises, facilities or installations used for carrying on the business of the enterprise whether or not they are used exclusively for that purpose'. It further provides that: • a "place of business" may also exist where no premises are available or required for carrying on the business of the enterprise and it simply has a certain amount of space at its disposal; • it is immaterial whether the premises, facilities or installations are owned or rented by or otherwise at the disposal of the enterprise, and • the place of business may be situated in the business facilities of another enterprise. This may be the case for instance where the foreign enterprise has at its constant disposal certain premises or a part thereof owned by the other enterprise. The term 'at its disposal' does not appear in the OECD definition itself and is introduced in the OECD Commentary. Paragraph 12 of the OECD Commentary provides that whether a location may be considered to be at the disposal of an enterprise in such a way that it may constitute a 'place of business through which the business of that enterprise is wholly or partly carried on' will depend on that enterprise having the effective power to use that location as well as the extent of the presence of the enterprise at that location and the activities that it performs there. A location is considered to be at the disposal of the enterprise where the enterprise is allowed to use a specific location that belongs to another enterprise or that is used by a number of enterprises and performs its business activities at that location on a continuous basis during an extended period of time. This will not be the case, however, where an enterprise's presence at a location is so intermittent or incidental that the location cannot be considered a place of business of the enterprise (e.g where employees of an enterprise have access to the premises of associated enterprises which they often visit but without working in these premises for an extended period of time). To illustrate these principles, the OECD Commentary provides several examples where representatives of one enterprise are present in the premises of another enterprise. Paragraph 17 provides the following example where an employee's presence would constitute a permanent establishment: A fourth example is that of a painter who, for two years, spends three days a week in the large office building of its main client. In that case, the presence of the painter in that office building where he is performing the most important functions of his business (i.e. painting) constitute a permanent establishment of that painter. In contrast, paragraphs 14 and 16 provide examples where the presence of a representative of an enterprise at the premises of another enterprise does not constitute a permanent establishment. It states at paragraph 14, the following: "... a salesman who regularly visits a major customer to take orders and meets the purchasing director in his office to do so. In that case, the customer's premises are not at the disposal of the enterprise for which the salesman is working and therefore do not constitute a place of business through which the business of that enterprise is carried on ...." At paragraph 16, it states the following: A third example is that of a road transportation enterprise which would use a delivery dock at a customer's warehouse every day for a number of years for the purpose of delivering goods purchased by that customer. In that case, the presence of the road transportation enterprise at the delivery dock would be so limited that that enterprise could not consider that place as being at its disposal so as to constitute a permanent establishment of that enterprise. 'At its disposal' has not been judicially considered in Australia, although it has been discussed in the Canadian case Dudney v R 2000 DTC 6169[2000] 2 C.T.C. 56 (Dudney). The issue in Dudney was whether a non-resident consultant providing services at a client's premises in Canada had a fixed base/permanent establishment in Canada. The Federal Court of Appeal (FCA) ruled that in coming to a determination the factors to take into account would include, among other things, whether the person had a legal right to exercise control over that location/space. When reviewing this factor, the FCA put some emphasis on the fact that while Mr. Dudney had access to the offices of the Canadian taxpayer, and did use them, his access was limited to the regular office hours of the Canadian taxpayer. The FCA concluded that Mr. Dudney did not have a fixed base at the client's premises and, consequently, his income was exempt from tax in Canada. However, the Commissioner addressed this in Taxation Ruling 2002/5 Income tax: Permanent establishment - What is 'a place at or through which [a] person carries on any business' in the definition of permanent establishment in subsection 6(1) of the Income Tax Assessment Act 1936? (TR 2002/5). The domestic definition of a permanent establishment is 'a place at or through which the person carries on any business...'. While discussing what may be a 'place', footnote 15 emphasises that control of a site or a lack thereof is not a determinative factor: ....[W]hile the Commissioner accepts that control of a site might indicate a place exists in relation to the person exercising control, and notwithstanding anything contained in the decision of the Canadian Federal Court of Appeal in Dudney v R 2000 DTC 6169, [2000] 2 C.T.C. 56, the lack of control by a person of an area does not mean that that area is not a place for the purposes of the definition of PE in relation to that person... First Condition - Project In the present circumstances, employees of Foreign Co regularly travelled to Australia over several income years to undertake various activities in connection to the delivery of the Project to the client. These activities were in furtherance of Contract Z and Contract B. Foreign Co employees performed these activities mainly at the client's premises, which are situated in City B and City A, and also to a lesser extent at Australian Co's offices located in these cities In order to carry out these activities for the Project, Foreign Co's employees were provided with access to the client's premises in City A and City B and Australian Co's offices and the use of non-dedicated workspaces at these sites. The fact that Foreign Co's access to and use of the client's premises and Australian Co's offices was not at the discretion of, or control of Foreign Co is not a decisive factor in deciding whether these areas were a 'place of business' of Foreign Co for the purposes of determining the existence of a permanent establishment - see the Commissioner's view in TR 2002/5 at footnote 15. In accordance with the OECD Commentary, the decisive factor is the fact that a certain amount of space was made available at the client's premises and Australian Co offices for Foreign Co employees to carry out work on an almost continuous basis in relation to the Project over a number of years. Therefore, we consider that the client's premises and Australian Co offices are a 'place of business' of Foreign Co employees in relation to activities undertaken in connection to the Project. Consequently, Foreign Co meets the first condition for a permanent establishment which requires the existence of a place of business to carry out its business activities. Second Condition - The place of business must be 'fixed' The definition of permanent establishment requires that a place of business must be fixed. In the normal way, there has to be a link between the place of business and a specific geographical point. The OECD Commentary provides guidance on what is required for the 'place of business' to be considered 'fixed' both geographically and temporally. A single place of business will generally be considered to exist where, in light of the nature of the business, a particular location within which the activities are moved may be identified as constituting a coherent whole commercially and geographically with respect to that business. Where the nature of the business activities carried on by an enterprise is such that these activities are often moved between neighbouring locations, there may be difficulties in determining whether there is a single "place of business". If two places of business are occupied and the other requirements of Article 5 are met, the enterprise will, of course have two permanent establishments - see paragraph 22 of the OECD Commentary. TR2002/5 at paragraph 29 reiterates this by stating that, while a place at or through which a person carries on any business in the context of the definition of permanent establishment in subsection 6(1) 'must be geographically permanent', [a]ny area, viewed commercially and as whole, may, in relation to the business concerned, be a place'. As an example of a 'place of business', the OECD Commentary states at paragraph 23 that a mine is a clear example of what may constitute a single place of business as it constitutes a single geographical and commercial unit as concerns the mining business. This is notwithstanding that business activities may move from one location to another in what may be a very large mine. A pedestrian street, outdoor market or fair in different parts of which a trader regularly sets up his stand also constitutes a single place of business for a trader. By contrast, an area where activities are carried on as part of a single project which constitutes a coherent commercial whole may lack the necessary geographic coherence to be considered as a single place of business. For example, where a consultant works at different branches in separate locations pursuant to a single project for training the employees of a bank, each branch should be considered separately. However, if the consultant moves from one office to another within the same branch location, he should be considered to remain in the same place of business (OECD Commentary at paragraph 25). In terms of the temporal aspect of permanence, the OECD Commentary provides (from paragraph 28), that a permanent establishment can only be deemed to exist if the place of business is not of a purely temporary nature. While the Commentary makes it clear that there is no specific rule, 'experience has shown that permanent establishments normally have not been considered to exist in situations where a business had been carried on in a country through a place of business that was maintained for less than six months'. However, this is not a hard and fast rule. It depends on the nature of the business. A place of business may constitute a permanent establishment even though it exists for a short period of time. For example, where business activities are of a recurrent nature, the total number of times that place of business has been used will be a factor to consider - see paragraph 29 of the OECD Commentary. At paragraph 32, the OECD Commentary also states that temporary interruptions of the activities do not cause a permanent establishment to cease to exist. Where a particular place of business is used for only very short periods of time but such usage takes place regularly over long period of time, the place of business should not be considered to be of a purely temporary nature. Second Condition - Project In this instance, it is considered that the activities undertaken by Foreign Co's employees at the different the client's premises /Australian Co's branch offices in delivering the Project, pursuant to various interrelated contracts, constitutes a coherent commercial whole. However, the various sites occupied by Foreign Co employees i.e the client's premises in each city and Australian Co's sites from which the activities on the Project are carried out cannot collectively be regarded as constituting a coherent whole geographically in the same way that, for example, activities conducted in different locations in broader mining area might be regarded as having been conducted in a single place of business (being the broader mining area as a whole). It is possible however that each of the sites i.e the client's premises and the Australian Co offices may comprise a separate and distinct permanent establishment. In this regard, the OECD Commentary at paragraph 22 (see also example at paragraph 25), accepts that an enterprise may have more than one fixed place of business at separate locations so long as they satisfy Article 5. Over several income years, Foreign Co has had one or more employees continuously present in City A and City B respectively to carry out is business activities on the Project. These employees worked primarily from the client's premises in each of these cities on the Project. At times these employees would also work on the Project at the relevant Australian Co offices in these cities because of the nature of access to the client's premises. In this regard, the employees' presence at the Australian Co offices could be a few times per week, as is the case of those employees working on Contract Z. Therefore, it is considered that in light of the above that each of the client's premises and the Australian Co's site constitutes a geographical and commercial unit from which Foreign Co carried out its various activities on the Project. We note that there may have been short periods when Foreign Co may not have had employees present in City B or City A. However, this temporary interruption to its activities by Foreign Co in Australia would not cause a permanent establishment to cease to exist. As mentioned in the OECD Commentary, when a particular location is used for a short periods but such usage takes places regularly over a longer period of time the place of business should not be considered to be of a temporary nature. As is the case here, Foreign Co employees returned to Australia on a constant and regular basis to work at the client's premises in City A and City B and the corresponding Australian Co sites in each of these cities over a number of income years. Therefore, each of these sites are considered to be separate geographically and temporally fixed places of businesses of Foreign Co. Third Condition - Carrying on of the business For a place of business to constitute a permanent establishment the enterprise using it must carry on its business wholly or partly through it. In relation to this requirement, paragraph 6 of the OECD Commentary provides that this usually means that persons who, in one way or another, are dependent on the enterprise (personnel) conduct the business of the enterprise in the State in which the fixed place is situated. At paragraph 35 of the OECD Commentary, it is further explained that the activity need not be of a productive character nor that the activity be permanent in the sense that there is no interruption of operation. However, the operations must be carried out on a regular basis. Third Condition -The Project Foreign Co is in the business of developing and supplying software system solutions for certain industries. The Project, a software system is a solution which is to be supplied to the client under various related contractual arrangements. Since 20xx income year, Foreign Co employees have been performing work to deliver parts of the Project at a fixed place of business situated at the client premises / Australian Co office located in City A and City B. The services provided such as advisory services and engineering reviews are integral to the delivery of the Project. Therefore, it is considered that the activities of Foreign Co's employees in providing these services as part of the Project are part of Foreign Co carrying on its business of providing software system solutions. Furthermore, it is considered that the support services provided by Foreign Co to the client: • pursuant to the subcontract contract arrangement (subcontract) with Australian Co under Contract B; and • pursuant to Contract Z; forms part of Foreign Co's business. The activities carried out in the provision of services under the subcontract and the Contract Z, specifically, have a purpose of profit (consideration earned from the contracts) and therefore carry a commercial purpose. In its private ruling application, the applicant is of the view that the training and advisory services, which is not a regular business activity of Foreign Co, falls outside the scope of Foreign Co's general business. However, from a broader perspective, the provision of training and advisory services might be regarded as a necessary part of (and cannot be detached from) Foreign Co's business of developing and supplying software system solutions, where the proper supply of such 'solutions' - whether directly or through one or more of its wholly-owned subsidiaries - requires the provision of such services; or at least where the provision of such services have a direct connection with the product or 'solution' provided. In the alternative, if the provision of training and advisory services is to be considered a separate business, it would nevertheless be one that is carried on by Foreign Co. The activities undertaken in Australia amount to the carrying on of a business given that: • as evident in this case, the obligations to perform such services are undertaken for a clear commercial purpose; and • such obligations have arisen independently from two separate commercial contracts. Consequently, it is considered that the third condition is satisfied as the business of Foreign Co was being partly carried on in Australia by its employees undertaking work on the Project at the fixed places of business. Accordingly, the activities undertaken in by Foreign Co in Australia in connection to the delivery of the Project satisfy the definition of a permanent establishment under Article 5. Exclusions from Article 5 definition - Article 5(3) It is also necessary to consider whether the provisions in paragraph 3 of Article 5 apply to the activities conducted by Foreign Co in Australia. Paragraph 3 of Article 5 lists a number of activities of an enterprise, which in themselves, will be deemed not to constitute a permanent establishment. Relevantly, under Article 5(3)(e) it includes the following activity: (e) the maintenance of a fixed place of business solely for the purpose of an activity of a preparatory or auxiliary nature, such as advertising or scientific research, for the enterprise; The term 'preparatory or auxiliary' in this Article is not defined. Paragraph 59 of the OECD Commentary on Article 5 explains that the decisive criterion to whether an activity has a preparatory or auxiliary character is whether or not the activity of the fixed place of business in itself forms an essential and significant part of the activity of the enterprise as a whole. A fixed place of business the general purpose of which is identical to the general purpose of the whole enterprise does not exercise a preparatory or auxiliary activity. An activity that has a preparatory character is one that is carried on in contemplation of the carrying on of what constitutes the essential and significant part of the activity of the enterprise as a whole. An activity that has an auxiliary character will generally correspond to an activity that is carried on to support, without being part of, the essential and significant part of the activity of the enterprise as a whole. It is unlikely that an activity that requires a significant proportion of assets or employees of the enterprise could be considered as having an auxiliary character - see OECD Commentary at paragraph 60. Article 5(3)(e) also requires that the activity be carried on for the enterprise itself. If an activity is performed not only on behalf of its own enterprise but also on behalf of other enterprises at the same fixed place of business, a permanent establishment will exist. For example, if an enterprise which maintained an office for the advertising of its own products or services were also to engage in advertising on behalf of other enterprises at that location, that office would be regarded as a permanent establishment of the enterprise by which it is maintained - see paragraph 61 of the OECD Commentary. Exclusions - Project Foreign Co is in the business of developing and supplying software system solutions. The Project that is currently being delivered to the client pursuant to the Contract B and Contract Z is one such solution. As such, the delivery of the Project to the client, a software system is considered to be activity that is considered 'identical to the general purpose of the whole enterprise'. In furtherance of Contract B and Contract Z, Foreign Co employees provide various services in connection to the delivery of the Project such as the provision of training and advisory services, engineering reviews and planning activities. The provision of these services cannot be described as being carried out in contemplation of the delivery of the Project as they are wholly related to the carrying out of the Project. Therefore, these services are not preparatory in nature. Moreover, as these services are an essential or integral part of the delivery of the Project, which is an activity that is the 'identical to the general purpose of the whole enterprise', the performance of these services by Foreign Co employees will be neither preparatory nor auxiliary in character. As mentioned above, for the exception in paragraph (e) to apply the service provided must also be performed for the benefit of Foreign Co itself. The services that Foreign Co employees provide pursuant to Contract Z and Contract B are services it performs for the client and Australian Co. Therefore, these activities do not satisfy the exclusion in Article 5(3)(e). No other exclusion listed in Article 5(3) is relevant to these circumstances. In conclusion, it is considered that the activities undertaken by Foreign Co in Australia in connection to the delivery of the Project give rise to multiple permanent establishments in Australia pursuant to Article 5 of the Convention. Permanent Establishment under Article 5 - Proposed Project As mentioned earlier, for the premises of another enterprise to constitute a 'place of business' of an enterprise, it must be at the disposal of the enterprise. A location is considered to be at the disposal of an enterprise where the enterprise is allowed to use a specific location that belongs to another enterprise and performs its business activities at that location on a continuous basis during an extended period of time. In this case, Foreign Co employees travelled to Australia during a number of income years to attend meetings at the premises of various entities i.e an unrelated third parties and independent entities in different cities to discuss the technical requirements for a potential project - the Proposed Project. Whilst Foreign Co employees made these trips to Australia over a number of years, these trips were made on an irregular basis to these different cities and were generally of a short duration. Consequently, it is considered that in light of the nature of these activities at these premises and the irregular basis that the employees visited these premises that the other entities' premises were not at the disposal of Foreign Co for this activity; and therefore, were not a 'place of business' for Foreign Co. Accordingly, the activities undertaken in respect of Proposed Project do not satisfy the definition of a permanent establishment under Article 5. As Foreign Co does not satisfy the definition of a permanent establishment under Article 5 in respect of the Proposed Project, it is not necessary to examine whether the exclusions in paragraph 3 of Article 5 also apply in relation to the activities for the Proposed Project. In conclusion, Foreign Co does not have a permanent establishment in respect of the activities undertaken in connection to the Proposed Project under Article 5 of Country Z Convention. The opening words of section 6(1) define a permanent establishment to mean "a place at or through which the person carries on any business". In Taxation Ruling TR 2002/5 Income tax: Permanent establishment - What is 'a place at or through which [a] person carries on any business' in the definition of permanent establishment in subsection 6(1) of the Income Tax Assessment Act 1936? (TR 2002/5) the Commissioner considers the meaning of this definition. At paragraph 27 of TR 2002/5, the Commissioner expresses the view there is no significant difference between the definition of a permanent establishment found in Double Tax Agreements (DTAs) and the subsection 6(1) definition, despite the use in the DTAs of the term a "fixed" place. Further, the Commissioner considers that as the definition in subsection 6(1) is based on the tax treaty concept of a permanent establishment, it is appropriate to take into account the OECD Model Commentary when interpreting the definition of permanent establishment in subsection 6(1) - see paragraphs 16 to 17 and footnote 9 of TR 2002/5 Paragraphs (e) to (g) of subsection 6(1) contains the following exclusions from the statutory definition of the term 'permanent establishment': • a place where the person engages in business transactions in that country through a commission agent or broker who receives commission at the rate customary to the type of business carried on by the agent or broker; • a place where the business is conducted through an agent who does not regularly fill orders from a stock of goods in that country, or who does not habitually exercise authority to negotiate and conclude contracts on behalf of their principal; or • a place where the person maintains a place of business in that country merely for the purpose of purchasing goods or merchandise. Section 6(1) definition - the Project In question 1 of this private ruling, it was concluded Foreign Co had a permanent establishment in Australia under Article 5 in respect of the activities conducted in connection to the Project. This was based on the interpretation of that term found in the OECD Model Commentary. Consequently, Foreign Co will have a permanent establishment under subsection 6(1) of the ITAA 1936 in respect of the activities conducted in connection to the Project. The exclusions from the subsection 6(1) definition of a permanent establishment in paragraphs (e) to of (g) of this provision have no application to these circumstances. Section 6(1) definition - Proposed Project In relation to the Proposed Project, it was concluded previously that Foreign Co activities in connection to the Proposed Project did not constitute a permanent establishment under Article 5 of Country Z Convention as it did not have a 'place of business'. Therefore, as Foreign Co does not satisfy the treaty definition of a permanent establishment under Article 5, it will follow that Foreign Co will also not satisfy the statutory definition of a permanent establishment in subsection 6(1). None of the specified inclusions listed in paragraphs subsection 6(1)(a) to (d) to establish a 'permanent establishment' are relevant to Foreign Co's circumstances in relation to the Proposed Project.