Guide

Does your company move with you?

You can become a non-resident and leave your Australian company behind, but the company might follow you anyway, or worse, become resident in two countries at once. For a founder or contractor with a Pty Ltd, the place you sit while making decisions can quietly change your company’s tax residency. Here is how central management and control actually works.

Central management and control, in plain English

A company is an Australian tax resident if it is incorporated here, that part never changes, so your Pty Ltd stays an Australian resident by incorporation. But a company can also be resident somewhere else if its central management and control (CM&C) is exercised there. CM&C is not about where the day-to-day work happens or where customers are. It is about where the high-level, strategic decisions of the business are actually made, setting the direction, approving major transactions, deciding dividends and investments.

The ATO’s view is set out in TR 2018/5 (and its accompanying practical guidance), published after the Bywater High Court decision. Its central message is uncomfortable for founders: if you are the person exercising real strategic control, then CM&C is wherever you are when you make those decisions. Move abroad and keep running the company from your laptop, and you may be exercising CM&C in your new country.

The sole-director-moves-abroad problem

The sharpest version is the one-person company. If you are the sole director and shareholder and you relocate to Singapore, there is no one left in Australia making the strategic calls. You are making them, from Singapore. The company is still an Australian resident (incorporated here) but may now also be a tax resident of Singapore, because that is where its central management and control is exercised.

This is not a fringe scenario. It is the default outcome for the thousands of consultants, founders and contractors who move overseas and keep operating through their existing Pty Ltd without changing anything about how it is governed. You didn’t restructure; you just got on a plane and kept working. That is often enough to create a dual-residency problem you never intended.

What dual residency breaks

A company resident in two countries is not a neutral state. It breaks several things at once:

• Franking. The franking system assumes an Australian resident company. Dual residency complicates (and can jeopardise) the company’s ability to frank distributions cleanly, undermining the value of dividends to any Australian-resident shareholders.
• Treaty access. Where a treaty applies, a dual-resident company’s residency for treaty purposes is no longer automatic. Modern treaties, as modified by the Multilateral Instrument (MLI), typically resolve company dual residence by competent-authority determination rather than a mechanical place-of-effective-management test, meaning two tax authorities must agree where the company “lives,” which is slow and uncertain, and until they do, treaty benefits can be denied.
• CGT on becoming non-resident. If a company ceases to be solely an Australian resident, or a restructure changes its residency, CGT consequences can arise on its assets, the same deemed-disposal logic that applies to individuals has company analogues that need checking before you move control offshore.

Trusts with foreign-resident trustees: the severe case

If your business runs through a discretionary or unit trust, the residency question is sharper still. A trust’s residency turns on the residency of its trustee and where the trust is centrally managed and controlled. If you are the trustee (or you control the corporate trustee) and you move abroad, the trust can become a foreign-resident trust, and that flips large parts of its tax treatment. Foreign trusts face different, generally harsher, rules on the source and taxation of income and gains, and can trigger CGT events on the change of residency. This is the severe case because the consequences are structural, not just a franking inconvenience.

The fixes, ranked

In rough order from cleanest to most fragile:

• Appoint genuine resident decision-makers. Install an Australian-resident director (or trustee) who actually exercises central management and control, chairs the meetings, weighs the decisions, and could say no. This keeps CM&C in Australia, but only if the control is real. A resident who rubber-stamps your instructions from abroad is exactly what the ATO unpicks.
• Restructure before you leave. Move the business into a structure suited to your new residency, sometimes a foreign company or a clean sale of the business is simpler than trying to hold an Australian entity in a compliant dual-resident state.
• Wind up or sell. If the company or trust exists mainly to service work you can do personally abroad, closing it and contracting directly may remove the whole problem, subject to the CGT on the way out.
• Document control meticulously and hope. The weakest option: keep operating but paper the governance carefully. Here’s what the ATO will actually fight you on, substance over form. Minutes alone won’t save a structure where you are plainly the only real decision-maker.

General information only, not tax, legal or financial advice, and no tax agent services are provided. Verify your position with a registered tax agent before acting. Rates and rules last verified: 23 July 2026.