Australian Branch Tax: How Foreign Branches Are Taxed

Question 1

What tax rate does an Australian branch of a foreign company pay?

Accepted Answer

30% on profits attributable to the Australian operations, or 25% if the foreign company is a base rate entity. The base rate entity test has no residency condition, but its AU$50 million aggregated turnover threshold counts the worldwide turnover of the entire connected group, so most multinational branches pay 30%.

Question 2

Does Australia have a branch profits tax?

Accepted Answer

No. Australia taxes branch profits at the corporate rate and imposes no further tax when those after-tax profits are remitted to head office. A branch remittance is not a dividend, so dividend withholding tax cannot apply, and no separate branch profits tax exists, as at June 2026.

Question 3

Does a registered branch lodge an Australian tax return?

Accepted Answer

Yes. The foreign company itself obtains an Australian TFN and lodges a company income tax return reporting the branch's attributable profits each year. A substituted accounting period can align the Australian return with the parent's home financial year, and an International Dealings Schedule is required if related-party dealings exceed AU$2 million.

Question 4

Can Australian branch losses be offset against other profits?

Accepted Answer

Branch losses belong to the foreign company. In Australia they carry forward against future Australian profits, subject to the continuity of ownership or business continuity tests. They cannot be transferred into an Australian consolidated group, but many home jurisdictions allow current-year branch losses to offset head office profits, which is a key reason loss-making market entries often start as branches.

Question 5

Does the foreign company need to register for GST?

Accepted Answer

Yes, once its GST turnover from sales connected with Australia reaches AU$75,000. The registration is in the name of the foreign company, using its own ABN. Once registered, the company lodges Business Activity Statements, usually quarterly, covering the branch's Australian sales and input tax credits.

Question 6

What does a branch have to file with ASIC each year?

Accepted Answer

The parent company's financial statements verified by Form 405 at least once each calendar year (no more than 15 months apart), or a Form 406 annual return if ASIC reporting relief applies. The lodgment fee is AU$1,583 from 1 July 2026 (AU$1,521 until 30 June 2026), and the company must maintain a local agent in Australia at all times.

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