Changes to the RTP schedule

Changes to the RTP schedule

Ross Hocking, Divyansh Sharma and Melissa Wong discuss changes to the RTP schedule to company income tax returns.

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The Reportable Tax Position (RTP) schedule to company income tax returns requires large businesses to disclose their most contestable and material tax positions.

In June 2016, we reported the Australian Taxation Office's (ATO) proposed changes to the 2017 RTP schedule. The ATO has now completed the first of the two tranche process which involves substantial changes made to RTP Category C. It has also released its Guide to Reportable Tax Positions 2017.

Category C previously required disclosure of reportable transactions or events where certain large CGT events generated a significant book to tax difference. Category C has now been expanded to cover a list of questions on the following specific issues that are concerning to the ATO:

  • Claiming deductions relating to non-assessable and non-exempt income
  • Funding of a special dividend or a share buy-back through an equity raising event
  • Arrangements involving offshore entities which source goods (procurement hubs)
  • Treatment of internally generated or revalued intangible assets for thin capitalisation
  • Restructuring of significant global entities
  • Related party foreign currency finance transactions with cross currency interest rate swaps
  • Cross-border related party leasing arrangements involving mobile assets
  • Permanent establishments which have allocated expenses associated with an intra-Australian group transaction, for a tax consolidated group
  • Self-assessment of related party dealings that involve a marketing hub arrangement
  • Exclusion of debt interest from debt capital which has been treated wholly or partly as equity and
  • Cross-border round robin type arrangements.

There are no materiality thresholds for Category C and the questions will be updated regularly throughout the year. Only taxpayers with income years ending on or after 30 June 2017 will be required to answer the new Category C questions.

Next year, the ATO will extend the RTP requirements for companies in economic groups with turnovers above $250 million and with income years ending on or after 30 June 2018.

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