Offshore capital gain tax on Aussie controlled foreign company?

[Temjin]

I was just wondering if anyone here have any knowledge in regards to the tax issues on offshore capital gain tax on Australian controlled foreign company?

That is, if I control a foreign company in one of many tax haven countries and use it to manage, invest and trade the cash asset, do I, as the "controller" or "sole director" of the foreign company, be liable to pay any unrealised or realised capital gain tax on any income the company earned?

Please be aware of that I am not advocating any tax avoidance strategies here as I am fully aware of the Australian anti-tax avoidance laws. I am merely asking if the director of an Australian controlled foreign company, or the company itself, is liable to pay any CGT on any shares/currencies/whatever that it "trades" in the international market. I.e active business trading

I am aware of the New International Tax Arrangements (Participation Exemption and Other Measures) Act 2004

http://www.ato.gov.au/print.asp?doc=/content/46869.htm

But it's all a bit complex to me so I am wondering if anyone here have prior knowledge and understanding of it could assist me.

Cheers!

 

[Temjin]

Does anyone know anything about the above?

 

[FinalFantasy]

I think if you are an Australian Citizen and you make a capital gain overseas then you should be liable to pay tax(in Australia) on that capital gain(from trading).

That is what I have heard before, whether it really is true or have changed I am not sure...

 

[Stinger]

Yes you msut declare it even if it hasnt been distributed - it is classified as CFC income (controlled foreign company income).

Plenty of info on ATO website if you want to read further.

 

[Temjin]

Yes you msut declare it even if it hasnt been distributed - it is classified as CFC income (controlled foreign company income).

Plenty of info on ATO website if you want to read further.

Yes, that's what I am expecting as well.

I guess there is almost nil tax advantage by using an offshore foreign company verse a local company when it comes to operating an investment/trading business. The company, local/foreign, will still have to pay the standard 30% company tax and at the same time, receive the same deduction for business expenses.

But I guess there is an advantage of better asset protections and access to other international markets via the foreign entity. And perhaps less paper work to administrate, etc...

Grrr, maybe it's time to move out of Australia, stupid tax law.