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The Australian Taxation Office has amended its guidance on the rules regarding the creation of a permanent establishment in Australia in response to the COVID-19 pandemic.

Taxation Ruling TR 2002/5 on Permanent Establishments (PE) has been updated to formally recognise the ongoing COVID-19 pandemic as an “extraordinary circumstance” where a forced presence of employees in Australia for more than six months may be considered “temporary” for the purposes of satisfying the temporal permanence requirement for foreign entities to trigger a PE in Australia. The ATO also updated its website on 25 May 2021 to confirm the extension to 31 December 2021 of its administrative guidance for foreign entities which may otherwise inadvertently create an Australian PE due to dislocated employees working in Australia as a result of the ongoing pandemic.