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Patrick H.
Patrick H., Lawyer
Category: Australia Law
Satisfied Customers: 5420
Experience:  Dip Law LPAB - Sydney based lawyer
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Can a company accept payments from Australian clients in

Customer Question

Can a company accept payments from Australian clients in situation when a) invoice is issued by non-Australian company, b) Australian company collects payment, c) Australian company sends payment to non-Australian company that issued the invoice.
Submitted: 1 year ago.
Category: Australia Law
Expert:  Leon replied 1 year ago.

Good Evening

My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question. Please understand this is not legal advise Please understand this is not legal advise but a guide to assist you.

The middle company is a problem.

It appears you are trying to avoid tax.

Who is the party providing the actual service?

Customer: replied 1 year ago.

This is none sense. It is a not a middle company. It is service of processing payments.

Expert:  kmslaw replied 1 year ago.

Hello my name is***** am a solicitor in NSW who will help with your inquiry today.

I can not at first glance see that there would be anything wrong with this, but your question prompts me to ask: has someone suggested to you that this practice may not be lawful? If so, who is the person or organisation that has suggested that this may be unlawful? Why have you set up the payments in this way? That will better help me answer your question.

Customer: replied 1 year ago.

hello Kylie, i am asking because our company has global operations and we need to accept payments from Australian clients. For this purpose we are considering opening up an Australian company, which will facilitate such transactions. The service is provided by company in the US, while Australian company collects payments and sends them to the US.

Expert:  kmslaw replied 1 year ago.

You don't need to set up an Australian company to accept transactions from Australian clients. There are many US companies to whom I make direct payments. Why would you go to the expense of setting up an Australian company to undertake this role? You can use a platform like Paypal or some other platform to take these payments. What makes you think you need to set up a company in Australia?

Customer: replied 1 year ago.

Because our customers prefer it this way. They feel more secure working with Australian company. We are in a business of organizing overseas travel tours.

Expert:  kmslaw replied 1 year ago.

You have not answered my question above which was "has someone suggested to you that this practice may not be lawful?" Who is that?

Customer: replied 1 year ago.

The first expert who replied said:

"The middle company is a problem. It appears you are trying to avoid tax. Who is the party providing the actual service?"

Expert:  kmslaw replied 1 year ago.

I am really asking you what prompted you to ask this question on JustAnswer. What made you think it was unlawful before you were answered by the expert?

Customer: replied 1 year ago.

I never thought it was unlawful, I asked if it would be acceptable according to Australian tax laws.

Expert:  kmslaw replied 1 year ago.

Hello. Looking back on your original question, you did not ask about tax laws, you just asked if it was lawful. Leon has given you an answer with respect to
Australian tax laws. I am not an expert in Australian taxation law, so I will have to opt out for another expert to either explain to you why they think it falls foul of the Australian tax laws or either go ahead under the Australian tax laws. I'm sorry it has taken so long to get to this, I was trying to ascertain from Leon privately the reason for his view and also from you why you didn't think it was lawful in the first place. I'm sure another expert can give you the reasons why it is lawful or unlawful.

Customer: replied 1 year ago.

Thanks for trying to understand our situation. In essence, the economic nature is processing of transactions. I don't see any reason why this is unlawful and trying to understand what are the caveats - licenses required if any.

Expert:  Patrick H. replied 1 year ago.

I note the previous two experts have opted out so I will try to finally answer your question.

There is no legal reason under Australian law why you would need to establish an Australian company to collect payments for an overseas based company. Indeed, if you did so you may find you in fact trigger certain tax obligations. For example, if you are providing services through your Australian based company then you likely should be charging GST on any sales in Australia and would liable for company income tax on any profits made by the Australian company. Whether this overall makes a difference to the overseas profit will depend on the overseas tax rules, but likely it will have some impact.

So the commercial question then becomes whether the marketing advantages of operating with an Australian company justify the administrative and tax cost of doing so.

Only an accountant familiar with your business can give you firm advice on the actual tax you may have to pay but I trust the above assists you in understanding the potential cost of establishing and collecting your Australian revenue through such a company, and accordingly, I would strongly recommend you engage an Australian Accountant to advise on the specifics of your proposed arrangement and to make a quantitative assessment of the costs and taxes of establishing and operating such an arragnement.

If you need help locating a suitable accountant the following link may assist you in finding a suitable accountant:

http://www.charteredaccountants.com.au/

I trust the above assists.

Good luck and PLEASE RATE MY ANSWER.

Patrick