The Australian Taxation Office (ATO) updated guidance on whether the presence of employees in Australia, due to the impacts of Covid-19, may create a permanent establishment (PE). The updated guidance states that the ATO will not apply compliance resources to determine if there is a PE in Australia under the following situations:
- There was no PE in Australia before the effects of COVID-19;
- The temporary presence of employees in Australia continues solely as a result of COVID-19 related travel restrictions;
- Those employees temporarily in Australia will relocate overseas as soon as practicable following the relaxation of international travel restrictions; and
- The employee has not been recognized as creating a PE or generating Australian-source income in Australia for the purpose of the tax laws of another jurisdiction.
This approach is applicable until 30 June 2021. From 1 July 2021, this approach will cease to apply and employers will be required to consider whether ongoing arrangements give rise to a PE in Australia.
