Jane Rolfe and Aaron Yeo answer some common questions from taxpayers on their country-by-country reporting obligations.
A number of 31 December year end taxpayers will have just finished their first Country-by-country (CbC) reporting period and will now be turning their minds to preparing the reporting obligations (i.e. the CbC report, Master File and the Australian Local File (ALF)).
Common questions asked as taxpayers navigate through this new process are:
|When are the CbC report, Master File and ALF due?||Reports are due 12 months after the end of the CbC reporting period. For 31
December year ends, the first filings are therefore due by 31 December 2017.
|How do I file the various reports?||The Master File and ALF must be lodged directly with the ATO. The primary obligation to lodge the CbC report is on the Australian taxpayer, but can be satisfied by the parent entity lodging the report with its home jurisdiction and then shared with the ATO.|
|Do I have to notify the ATO who is lodging the CbC report?||Yes, the notification will be made in the ALF.|
|Are there penalties for non-compliance with the CbC regime?||Yes, there are financial penalties (currently up to $4,500 but there is current draft legislation to increase penalties up to $450,000). There may also be non-financial penalties.|
|Are exemptions from the CbC regime available and in what circumstances?||
Yes, an exception may be available in limited circumstances and must be applied for. The two main grounds for exemptions are:
|Does the ALF replace the transfer pricing documentation rules in Australia?||No, the ALF is separate and in addition to the existing transfer pricing documentation rules. The ALF is also different to the OECD Local File.|
|How does the ALF differ to Section A of the international dealings schedule
|The ALF will require more granular disclosures about the characteristics of each controlled transaction, qualitative business-related disclosures and attaching intercompany agreements, foreign rulings/APAs and financial accounts.|
|Has the ATO provided any administrative concessions to minimise the
|Yes, taxpayers will not have to prepare Section A of the IDS if they lodge Part A of the ALF at the same time as the income tax return for the year ended 31 December 2016.|
|What are the formats which Intercompany Agreements can be uploaded as part of
|Only Word and PDF formats will be permitted.|
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