Private ruling: Supply of goods to Australia and source of income
Date of advice: 28 May 2021
Published: August 2021
Ruling period: Income year ended 30 June 20XX | Income year ended 30 June 20XX
Date scheme commenced: During the income year ended 30 June 20XX

Ruling: Q1: Will the company have a permanent establishment in Australia? | A1: Not applicable. As the foreign jurisdiction in which the company resides does not have a tax treaty with Australia, and the taxation of dividends, interest or royalties are not relevant to the current matter, the issue of 'permanent establishment' (PE) will have no relevance to the circumstances of this case. The general income rules contained in section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) will apply to residents of non-treaty jurisdictions. The definition of PE contained in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936): • is, in the case of a country with which Australia does not have a tax treaty, not relevant to determining the Australian income tax obligations of a resident of that country. • is relevant for the purposes of withholding tax on interest and for taxing royalties paid to non-residents but these types of income are not relevant to the current matter. | Q2: Will the company derive assessable income for the purpose of section 6-5 or 6-10 of the ITAA 1997 from the sales of its products via the proposed arrangements? | A2: No. | Q3: Will the company be able to claim an exemption from import GST at the time a single product with a value below AU $1000 is sold online (with GST added to it) and shipped from a licensed (bonded) warehouse to an Australian consumer? | A3: The company will not have to pay the GST at the time a single product with a value below AU $1000 is sold online (with GST added to it) and shipped from a licensed (bonded) warehouse to an Australian consumer. The company will subsequently remit the GST charged to the Australian consumer in its quarterly GST returns. | Q4: If the company is able to claim such an exemption from import GST will it have to pay import GST first and then claim a credit back? | A4: Under the circumstances described in the facts of this ruling, if the requirement to provide the relevant import documents is met, section 42-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) will prevent the company's goods from being taxable importations. This means that GST will not be paid at the time an item is entered for home consumption. In this case we have been informed that the company will be registered for GST as a limited registration entity. A GST limited registration entity has only quarterly tax periods. Therefore, GST will be paid in the company's quarterly GST returns. Please note that a limited registration entity cannot make creditable acquisitions or creditable importations. Consequently, such an entity cannot claim GST credits in relation to their acquisitions or importations. | Q5: Can the company not pay the import GST provided all the supporting paperwork is presented to the customs authorities at the time of formal importation of the goods from the licensed (bonded) warehouse? | A5: As stated at question 3 the company will not have to pay GST at customs if it provides all the supporting paperwork notifying that a supply was a taxable supply on the customs declaration prior to the goods being entered for home consumption.

Relevant facts and circumstances: The company is a non-resident of Australia for Australian tax purposes. The company is based in a foreign jurisdiction that does not have a tax treaty with Australia. The company is an online seller of goods and has identified Australia as the next market for their expansion and it is ready to start selling its products online through a website. The customs value of each of the company's products individually is lower than AUD $1,000. The products will be listed on a website and the domain will be managed by a third-party internet service provider (ISP). Neither the company nor anyone connected to it will own, manage or operate servers in Australia. The ISP/website provider is not an agent or associate of the company, but an external non-resident company. The company has no right or power to choose the website server's location. The server for the website is managed and/or owned by the external IPS company and will not be located in Australia. The company will have a standard supply of services agreement with the external IPS company. All the content of website will be managed and amended as necessary by the company's employees located in a foreign jurisdiction. Customers who will buy from the website will enter an online contract with the company, which is a non-resident entity. The company will register for a simplified online GST registration. Australian GST of 10% will be added to the net cost of the products and be payable by the Australian online customer. This GST will be collected by the company and remitted to the ATO in accordance with Australian GST requirements. Payment by an Australian customer on the website will be made to the company's bank account in a foreign jurisdiction. The company sources all its products overseas, from where they will be shipped to Australia. Products will be shipped together into containers so that the company will have stock available in Australia for fast delivery. The company will use third party contractors to ship the products to Australia. The products' destination upon their arrival in Australia will be various bonded warehouses (i.e., licensed under section 79 of the Customs Act 1901 ) across Australia managed by third parties. The company will have no independent access or control over these warehouse facilities. The company does not yet have a draft or pro-forma contract but is in contact with a number of potential providers of warehouse services in Australia. It has not chosen one yet as it is waiting the ATO's answer regarding the correct treatment of its movement of goods through a licensed/bonded warehouse, which not all Warehouse Operators have. The company will engage a Warehouse Operator based in Australia to perform the following activities and functions: (i) Unloading of goods from the transporting ship. (ii) Dealing with all customs and administrative requirements connected to the entry of the company's goods into Australia. Customs clearance might occur at this point and/or after the sale to an Australian customer, depending on the ATO's advice in this regard. (iii) Moving the goods from the port of arrival to the Operator's warehouse or warehouses. (iv) Shipping the goods to each Australian customer that buys the company's products online. This can be done in two ways, depending on the potential to integrate the Warehouse Operator's technology with the company's website. If it can be integrated, then every time a customer orders a product, the Warehouse Operator will receive an automatic notification in their systems to ship the goods to the relevant customer. If software integration is not possible, the company's employees in a foreign jurisdiction will manually send shipment details to the Warehouse Operator after each confirmed sale online in order to initiate shipment. (v) Collection of returned goods and shipment of replacement goods. The collected goods will be taken back to the warehouse and the company will instruct the Warehouse Operator whether or not to dispose of it, or to add it back to the stock as the company might choose to sell it at a discounted price. Activities (i) and (ii) listed above might be assigned to a third party if the chosen Warehouse Operator is not able to provide these services (i.e. through internal customs agents of their own). When the company refers to the Warehouse Operator it also refers to the potential third party who might be engaged to perform services (i) and (ii) listed above. The company will only engage a Warehouse Operator to perform the services listed above and the Warehouse Operator will have no authority to act for or on behalf of the company or to represent the company in any other way. The warehouse will at all times remain under the complete possession of the Warehouse Operator and the company will not actually lease floor space, as it would not have any staff in Australia to manage it and carry out the necessary logistical operations. The goods will arrive individually packaged to comply with Australian packaging regulations, so there will be no need for any additional packaging services from the Warehouse Operator. The company will retain ownership of the goods when they are stored at the warehouse. Title to the goods will pass only when a sale is concluded online between an Australian customer and the company. At that point the goods will be owned by the Australian customer but under the terms of the contract of sale, the company will bear the liability to ensure that the good is cleared of customs and shipped to the customer at the company's expense. The Warehouse Operator can only fill orders on the instructions of the company and cannot do so independently of the company. There will be no control by the company over the Warehouse Operator, or vice versa, nor a common controller of both. The parties will instead fulfil their duties in accordance with the terms of their contractual relationship. In practical terms, the Warehouse Operator will receive instructions (either automatically or manually) from the company to: (i) ship the goods to each Australian customer every time a sale is concluded online, or (ii) to collect a returned item from an Australian customer. The company will have no control on how the Warehouse Operator fulfils its contractual duties (e.g. what route to take, which vehicle to use, etc.), so long as shipment occurs within the agreed contractual timeframes to be agreed between the parties. All the commercial decisions regarding discounts and promotions will be undertaken by the company and its management in a foreign jurisdiction. All customer queries and complaints, including refunds, will be handled by the company's employees in a foreign jurisdiction. Should an issue arise with the logistics of the warehousing of the goods, this will also be handled by the company's employees in a foreign jurisdiction, who will communicate with the relevant third-party warehouse provider to resolve the issue. The company will have no employees, agents or any individual or company representing it in Australia in promoting, marketing or selling its product in Australia. Assumption The company's products will each individually have a customs value below AU $1,000 for importation and GST purposes.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-5(3) | A New Tax System (Goods and Services Tax) Act 1999 section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 section 11-20 | A New Tax System (Goods and Services Tax) Act 1999 section 13-5 | A New Tax System (Goods and Services Tax) Act 1999 section 13-10 | A New Tax System (Goods and Services Tax) Act 1999 section 13-20 | A New Tax System (Goods and Services Tax) Act 1999 section 15-5 | A New Tax System (Goods and Services Tax) Act 1999 section 15-10 | A New Tax System (Goods and Services Tax) Act 1999 section 42-15 | A New Tax System (Goods and Services Tax) Act 1999 section 84-75 | A New Tax System (Goods and Services Tax) Act 1999 section 84-77 | A New Tax System (Goods and Services Tax) Act 1999 section 84-85 | A New Tax System (Goods and Services Tax) Act 1999 section 146-5 | A New Tax System (Goods and Services Tax) Act 1999 section 146-10 | A New Tax System (Goods and Services Tax) Act 1999 section 146-15 | Electronic Transactions Act 1999 section 14A | Electronic Transactions Act 1999 subsection 14B(1) | Electronic Transactions Act 1999 subsection 14B(3) | Electronic Transactions Act 1999 subsection 14B(4) | Electronic Transactions Act 1999 Part 2A | Electronic Transactions Act 1999 subsection 15B(1) | Electronic Transactions Act 1999 section 15C

Reasons for decision: Summary: The company will not derive assessable income from customers based in Australia for the sale of its products under the proposed arrangement under subsection 6-5(3) of the ITAA 1997. The proposed arrangement will involve Australian customers however, the source of your business income is from outside Australia. | Detailed Reasoning - Detailed reasoning: Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a non-resident taxpayer includes ordinary income derived directly or indirectly from all Australian sources during the income year. Business income is ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. To determine the tax treatment of income from international transactions involving Australia, non-residents it must first be determined whether the income has an Australian or foreign source. | Detailed Reasoning - Non-resident business trading profits: Business profits can arise out activities such as negotiation in conclusion of contracts, the processing of orders, the advertisement, storage and delivery of goods, the receipt and processing of payments and the provision of after sales services. The substance of the transaction in question as a whole and the various factors need to be considered in determining where business profits are sourced. The source of business profits is generally the place where the business trades or renders services. Where the transactions consist largely of the making of contracts (and the place of their performance is not a significant factor) then the place where the contracts are made may be the determined as the source. However, if the making of the contract does not have as much importance as the performance of the contract, then the place where the contract is actually performed will be the source. When determining whether Australia has a taxing right in respect of income derived in Australia by a foreign resident company, it is necessary to consider the definition of a PE contained in any applicable tax treaty. Australia's tax treaties generally include a provision corresponding to the definition of PE contained in subsection 6(1) of the ITAA 1936. However, in this case the company is a resident of a foreign jurisdiction which does not have a tax treaty with Australia. As explained in the answer to Question 1, the concept of PE is only applicable to foreign jurisdictions that have a tax treaty with Australia as defined in the PE articles of the relevant double tax agreement. The general source of income rules contained in subsection 6-5(3) of the ITAA 1997 will apply to non-treaty jurisdictions. | Detailed Reasoning - Source of income: Apart from certain rules prescribed for statutory income (for example, interest, royalties and dividends), there is nothing in the income tax legislation which prescribes the source of income. In the absence of statutory source rules, reliance is placed on common law rules that relate to income source. Australian courts have held various factors are relevant to determining source, as confirmed in the following cases, Nathan v. Federal Commissioner of Taxation (1918) 25 CLR 183 at 189-190 and Federal Commissioner of Taxation v. United Aircraft Corporation (1943) 68 CLR 525; (1943) 7 ATD 318; (1943) 2 AITR 458. The courts also confirmed the following factors are relevant to determining the source of income: • the place of making the agreement; • the place of payment of fees arising from the agreement; and • the place of performance of services or the supply of goods under the terms of the agreement. What is most relevant when determining source are the facts according to the circumstances of the case. For example, the location of the business premises where the majority of the business activities are carried out, may be the most relevant factor. An example of this is Watson v CT (WA) (1930) 44 CLR 94; 1 ATD 61, where an accountant with a Western Australia practice travelled to Victoria on his client's behalf. The court determined the source of the income was Western Australia where the tax agent's practice was located. | Detailed Reasoning - Australian or foreign source?: To determine whether income derived from internet sales under the proposed arrangement has an Australian or foreign source, it will be necessary to consider the three common factors held by the courts. 1) The place of making the agreement The source of income derived from trading profits would depend on the essence of the business. If the "essence of the business" is contracting for the purchase and resale of goods, the general rule is that the place of formation of the contract will determine source (see, for example, Michell v FCT (1927) 46 CLR 413; 34 ALR 25). If the essence of the business is not contracting for the purchase and resale of goods, it is generally accepted that the place where such activities are conducted will determine the source of income. In relation to business income more generally, the source of that income is generally where the trading is undertaken or where the services are rendered. The general rule (under ordinary principles of law) is that a contract will be formed where the final act, which is regarded as completing the contract, occurred or is effective. This is generally the place where the contract is accepted. The Electronic Transactions Act 1999 (ETA) provides that for the purposes of a law of the Commonwealth, a transaction is not invalid because it took place by means of one or more electronic communications. The ETA also makes a provision for determining the time and place of the dispatch and receipt of an electronic communication. The ETA was amended in 2011 to include additional provisions applying to contracts involving electronic communications contained in Part 2A, sections 15A to 15E of the ETA. The ETA has relevance to a contract for the supply of goods between the company and an individual based in Australia. The ETA applies on the basis that the contract is an international contract, and the Commonwealth has the powers in relation to international and inter-State trade under Article 51(i) of the Australian Constitution. Acceptance of a contract requires actual communication of that acceptance, and for the purposes of a law of the Commonwealth, unless otherwise agreed between the originator and the addressee of an electronic communication, the time of receipt is deemed to occur 'when the electronic communication enters the information system designated by the addressee' (section 14A of the ETA). Subsection 14B(1) of the ETA states that for the purposes of a law of the Commonwealth, unless otherwise agreed between the originator and the addressee of an electronic communication: (a) the electronic communication is taken to have been dispatched at the place where the originator has its place of business; and (b) the electronic communication is taken to have been received at the place where the addressee has its place of business. Subsection 15B(1) of the ETA provides that a proposal to form a contract made through one or more electronic communications that: (a) is not addressed to one or more specific parties; and (b) is generally accessible to parties making use of information systems; is to be considered as an invitation to make offers, unless it clearly indicates the intention of the party making the proposal to be bound in case of acceptance. Subsection 15B(2) of the ETA states that subsection (1) extends to proposals that make use of interactive applications for the placement of orders through information systems. Further, section 15C of the ETA provides that a contract formed by: (a) the interaction of an automated message system and a natural person; or (b) the interaction of automated message systems; is not invalid, void or unenforceable on the sole ground that no natural person reviewed or intervened in each of the individual actions carried out by the automated message systems or the resulting contract. In this case, customers who wish to buy products from the company's website will enter into an online contract with the company. The electronic communication between the parties will, therefore, be made via the website. The offering party (the customer) will make the offer to purchase the goods from a location in Australia and the accepting party (the company, as vendor of the goods) will be based in the foreign jurisdiction. The company's acceptance of the offer will be via electronic communication through an information system. Therefore, the contract will be originated by the customer and will be accepted via electronic communications by the addressee (the company) in the foreign jurisdiction, which is the company's place of business. It follows then that the place in which the contract is accepted will be overseas in accordance with Part 2A of the ETA. This factor indicates that the income derived from the proposed arrangement is likely to be foreign sourced. 2) The place of payment of fees arising from the agreement It is noted that the company will be using the website for the proposed arrangement with the expectation that customers using this website will be based in Australia. Australian customers who will purchase goods on this website will make a payment via electronic means (i.e. credit card or other electronic form of payment) from the physical location in which they access the website. Once the payment by an Australian customer on the website has been authorised via the relevant financial institution, it will be credited to the company's bank account in a foreign jurisdiction. The trading activity of the proposed arrangement will be done by the website. However, subsection 14B(4) of the ETA provides that the sole fact that a party makes use of a domain name or email address connected to a specific country does not create a presumption that its place of business is located in that country. The payment will be completed by electronic means and communications by the credit to the company's bank account in a foreign jurisdiction. It follows then, that place of payment will be in a foreign jurisdiction. This factor indicates that the income derived from the proposed arrangement is likely to be foreign sourced. 3) The supply of goods under the terms of the agreement The purchase of goods by the customer will be an electronic transaction under the terms of the proposed arrangement. In this case, the customer selects an item from an online catalogue of tangible goods and orders the item electronically directly from a commercial provider. The product is physically delivered to the customer by a common carrier. The ruling request states that the company will look to integrate the website with the Warehouse Operator's IT systems so that the Warehouse Operator will receive the order directly and be able to process it immediately. If software integration cannot be done with the Warehouse Operator's IT systems, the company's employees in the foreign jurisdiction will forward the order to the Australian Warehouse Operator, which will organise shipment of the product to the customer. Subsection 14B(3) of the ETA provides that a location is not a place of business merely because that is: (a) where equipment and technology supporting an information system used by a party are located; or (b) where the information system may be accessed by other parties. Therefore, the proposed integration of the Warehouse Operator's software, will not deem the Warehouse Operator's location to be the place of business for the proposed arrangement. All decisions concerning the supply of goods under the proposed arrangement are made by made by the company's employees in the foreign jurisdiction. The Warehouse Operator can only fill orders on the instructions of the company (either automatically or manually) and cannot do so independently of the company. All the commercial decisions regarding discounts and promotions will be undertaken by the company and its management in foreign jurisdiction. Further, all customer queries and complaints, including refunds, will be handled by the company's employees in the foreign jurisdiction. It is therefore considered that the supply of goods under the proposed arrangement will take place in the foreign jurisdiction. This factor indicates that the income derived from the proposed arrangement is likely to be foreign sourced. | Detailed Reasoning - Conclusion: The trading activity and essence of business in this case will be the purchase of goods by customers via an electronic transaction made on a website. The ISP/website provider is not an agent or associate of the company, but an external non-resident company with headquarters overseas and the server for the proposed website will not be located in Australia. This transaction will involve a contract of sale between the customer and the company. As explained above, it is considered that communication of acceptance of the contract to purchase goods will completed overseas. As the goods will be purchased by a customer via the internet, the payment of fees under the proposed arrangement will be completed by credit to the company's bank account in the foreign jurisdiction. All decision making for sales, marketing, customer queries and complaints will be conducted by the company's employees based in the foreign jurisdiction. Accordingly, it is considered that the source of income derived under the proposed arrangement will be foreign sourced. The company will, therefore, not derive assessable income in Australia from the proposed arrangement under subsection 6-5(3) of the ITAA 1997 | Detailed Reasoning - Question 3: Section 13-10 of the GST Act explains that an importation is not a taxable importation if it is a non-taxable importation under Part 3-2 or it would have been a supply that would be GST-free or input taxed. Part 3-2 of the GST Act, particularly subsection 42-15(1) provides that an importation of goods is a non-taxable importation to the extent that the supply of the good is a supplier-taxed offshore supply of low value goods. No GST is payable on a non-taxable importation. Under subsection 84-85(3) of the GST Act a supply of goods is a supplier-taxed offshore supply of low value goods if the supply is: • an offshore supply of low value goods; • a taxable supply solely under section 9-5; and • connected with the indirect tax zone (Australia) solely because of the Subdivision. The facts provided indicate that the goods the subject of this ruling are considered to be offshore supplies of low value goods (section 84-77 of the GST Act). Law Companion Ruling (LCR 2018/1) provides the Commissioner's view in relation to GST on low value imported goods. The following paragraphs have been reproduced from LCR 2018/1: | Detailed Reasoning - Preventing double taxation of goods: 205. The amendments are designed to ensure that GST is not applied twice to low value goods that are imported to Australia. For this to occur, the Act ensures that an offshore supply of low value goods is either only treated as a taxable supply or only treated as a taxable importation . This is achieved by 'switching off' either the taxable supply or taxable importation rules so both don't apply to the same goods. 206. In general: • if notification is provided in the approved form (which is linked to the import declaration) that a supply was a taxable supply under these amendments, the taxable importation will be switched off, and • if notification is not provided before a taxable importation is made, the taxable supply can be switched off, if certain conditions are met. | Detailed Reasoning - Notice requirements under section 42-15: 212. The approved form requirements will be met if the following information is included on the import declaration for the goods: • the GST registration number of the supplier, and • information indicating which goods were a taxable supply (this will be displayed by use of a GST-paid exemption code). 213. To switch off the taxable importation, this notification must be provided by the time at which the taxable importation would otherwise have been made. Using the terms in the customs legislation, this means the notification must be provided prior to goods being delivered into home consumption in accordance with an authority to deal, by including the information in the import declaration, or in an amended import declaration. Therefore, if notification is provided prior to the goods being delivered into home consumption the company will be able to claim an exemption from import GST regarding the online sale of a single product with a value below AU $1000 (with GST added to it) and shipped from a licensed (bonded) warehouse to an Australian consumer. However, please note that the company will subsequently remit the GST charged to the Australian consumer in its quarterly GST returns. | Detailed Reasoning - Question 4: To reiterate under subsection 84-85(3) of the GST Act a supply of goods is a supplier-taxed offshore supply of low value goods if the supply is: • an offshore supply of low value goods; • a taxable supply solely under section 9-5; and • connected with the indirect tax zone (Australia) solely because of the Subdivision. The facts provided indicate that the goods the subject of this ruling are considered to be offshore supplies of low value goods (section 84-77 of the GST Act). Section 9-5 of the GST Act provides that a supply is a taxable supply if an entity makes the supply for consideration, in the course or furtherance of an enterprise it carries on, the supply is connected with Australia and the entity is registered or required to be registered for GST. However, the supply is not taxable to the extent it is GST-free or input taxed. The company's supplies will be made for consideration; in the course or furtherance of an enterprise the company carries on and the company will be registered for GST as a limited registration entity. A supply of low value goods is connected with Australia if the recipient of the supply is a consumer of the supply (section 84-75 of the GST Act). An entity is a consumer of a supply if it is not registered or if registered for GST the entity does not acquire the thing supplied solely or partly for the purpose of an enterprise the entity carries on. In this case the facts provided indicate the company's supplies will be made to consumers. Further, the company's supplies will neither be GST-free nor input taxed. Therefore, where an offshore supply of low value goods is connected with Australia under subdivision 84-C of the GST Act and meets the other requirements in section 9-5 of the GST Act the supply is a taxable supply and consequently it is a non-taxable importation (section 42-15 GST Act). In this case we have been informed that the company will elect to be a limited registration entity. Section 146-10 of the GST Act provides that an acquisition made by a limited registration entity is not a creditable acquisition. Under section 146-15 a limited registration entity cannot make creditable importations. This means that as a limited registration entity the company will not be able to claim GST credits on creditable acquisitions (e.g. acquisitions of goods or services made to the company by Australian businesses) made in the course or furtherance of carrying on its enterprise. Therefore, though the company will have to remit GST charged to the Australian consumer in its company's quarterly GST returns it cannot claim GST credits. | Detailed Reasoning - Question 5: See answer to questions 3 & 4. | Detailed Reasoning - Types of GST registration: An entity is required to be registered for GST if its annual turnover is at or over the GST registration threshold of $75,000 ($150,000 for a not for profit entity). An entity may voluntarily register for GST under the standard or simplified GST system. In the event an entity is not registered or required to be registered for GST then its sales will not be subject to GST and it will not be able to claim GST credits on its importations of goods into Australia as well as on its creditable acquisitions made in Australia. Most non-resident businesses that are required to register for Australian GST can choose from two types of GST registration - 'simplified' or 'standard'. simplified GST registration : For eligible non-residents who make supplies connected with Australia that want to electronically register, report and pay quickly and easily and don't need to claim GST credits. | Detailed Reasoning - standard registration:: For non-resident entities that have an Australian business number (ABN), make supplies connected with Australia, issue tax invoices and want to claim GST credits. | Detailed Reasoning - standard 'GST-only' registration:: For non-residents with a business or enterprise outside Australia that can claim GST refunds for Australian GST that has been paid (often referred to as 'claim-only'). With this option, non-residents: • are not entitled to an ABN • do not make supplies connected with Australia • voluntary registration. Non-residents are not required to register with the Australian Securities & Investment Commission (ASIC) to get an Australian Registered Body Number (ARBN) unless they have a business in Australia. An entity can change the type of its registration, but it cannot be registered in both at the same time.

This ruling applies for the following periods: | The company is a non-resident of Australia for tax purposes and is based in a foreign jurisdiction which does not have a tax treaty with Australia. | As the foreign jurisdiction does not have a tax treaty with Australia, the issue of PE will have no relevance to the circumstances of this case. | The general income rules contained in section 6-5 of the ITAA 1997 will apply to residents of non-treaty jurisdictions. | The definition of PE contained in subsection 6(1) of the ITAA 1936 is, in the case of a country with which Australia does not have a tax treaty, not relevant to determining the Australian income tax liability on business income of a resident of that country. | The definition of PE contained in subsection 6(1) of the ITAA 1936 may be relevant for the purposes of withholding tax on interest and royalties paid to non-residents but these types of income are not relevant to the current matter. | Therefore, the concept of PE is not relevant to your current circumstances but the company may be liable to income tax in Australia based on the source of income derived from sales under the proposed arrangement in accordance with the general income rules contained in section 6-5 of the ITAA 1997.