Geoffrey Yiu and Terri Symonds explain the ATO's new Reportable Tax Position (RTP) schedule for companies in the 'Top 1000' group.
In 2011, the Australian Taxation Office (ATO) introduced the Reportable Tax Position (RTP) schedule as a pilot to 'higher risk' taxpayers (broadly, the Top 100), to be lodged with the company income tax return. However, a number of those taxpayers were in an advance compliance arrangement (ACA) with the ATO, which provided an exemption from completing the RTP schedule.
The ATO recently confirmed that they are extending the obligation to complete the RTP schedule to companies in economic groups with a turnover of greater than A$250M, commencing from years ending on or after 30 June 2018. A company will only be required to complete the RTP schedule if notified to do so by the ATO. Taxpayer notifications commenced in the first week of August 2017.
The taxpayers in this 'Top 1000' group are unlikely to be in an ACA and thus the RTP schedule represents a real expansion to their compliance obligations.
The RTP schedule requires the taxpayer to provide information under the following categories:
The above is only a high level outline. The RTP Guide is 28 pages and technical and, for example, on one view requires all material positions that are undocumented to be disclosed as Category A RTPs.
The RTP schedule disclosures will be used by the ATO to focus its compliance activities. Taxpayers will need to take the time to understand their RTP reporting obligations and formulate a strategy for managing their RTP risk.
While the schedule does not need to be completed until lodgement of the 2018 tax return (or 2019 tax return for early balancers), taxpayers should formulate a work plan now so as to reduce and manage potential RTP disclosures, as well as consider how to disclose tax matters in their financial statements.