New Corporate Structure Advice

It sounds like the HK company is going to end up tax resident in Australia because that's where the operations, control, and management take place so it's all pretty much for nothing.

The trust isn't going to be of much use if you remain resident in Australia. Under CRS/AEOI or FATCA or other exchange of information mechanisms, there is an ever increasing probability that the ATO will find out about your structure. And it probably won't hold, unless you can convince a court otherwise.

A trust setup typically only works if it's structured entirely outside of Australia, with distribution in line with Australian law (which might include a timed delay) and controlled by a foreign trustees.

If you don't want to pay Australian corporate tax, you need to move operations outside of Australia. Set up a genuine office with staff in some low-tax/low-cost jurisdiction, to give yourself a chance of having the company's revenue not be considered derived from within Australia. Although in a hostile situation, the ATO could still argue that a portion of the profits derive from intellectual property work or management decisions taken within Australia.

If you don't want to pay Australian personal tax, you need to move yourself outside of Australia.

SparksyB said:

Or you have to be full time out of the country.

Full time and primarily. This is nuance best discussed with a local tax adviser in Australia. IIRC, there were changes recently that increased the scope for the conditions under which Australia considers a foreign company tax resident.

SparksyB said:

I guess where I'm going with this is, can we get away with going to HK for 6 months a year, stay in AUS for 6 months and have an argument at least that the company is in HK we're tax residents there, we just spend some time in AUS...

That particular split is probably a no-go. Think more along the lines of living full-time in HK and visiting Australia as a tourist once in a while to see friends and family.

SparksyB said:

In terms of us personally I have another partner who's from a tax friendly jurisdiction, if we paid profits to them as dividends and or wages and used the money from their account would that flag anything?

If they are the sole shareholder, then the first step is totally fine.

You'll run into other problems when that person sends money to you, though. That becomes a taxable event. It'll probably be seen as salary payments (the boss paying their employees, albeit from a personal account), and sounds like accounting fraud. It creates a personal liability nightmare for the overseas partner if things ever turn sour.

SparksyB said:

What's actually flagging to the ATO is it money in our accounts (that are in our names)?

Exchange of information is automatic (look into CRS/AEOI) or by request. AUSTRAC would also pick up on the transaction pattern. I've several times heard AUSTRAC touted as one of the best in the world at what they do.

SparksyB said:

I'm thinking if we just ran the company flat by paying high wages and dividends to partners in tax friendly jurisdictions would that keep us under the radar?

As long as the bookkeeping supports it and as long as overseas partners keep their parts and don't give the rest of you regularly occurring "gifts," yes.

Otherwise, very high risk that AUSTRAC would, sooner or later, detect what you're doing and send someone over to ask some uncomfortable questions (or just pass it to ATO which issues an invoice for you to come dispute in court).

The gist of it is that arrangements like the one you're aiming for aren't doable anymore. They were shaky at best a few years ago, and are extremely fragile now and going forward.