Country by Country (CbC) reporting requirements were introduced in Australia in the Multinational Anti-Avoidance Law (MAAL) on 11 December 2015. The MAAL applies on or after 1 January 2016, and therefore 2017 will be the first year of lodgement for taxpayers.
The CbC reporting introduced the three-tier documentation approach of the OECD. The CbC reporting requirements includes three types of reports as follows:
No. The CbC reporting affects Significant Global Entities (SGE). SGE are multinational groups with annual global income equivalent to AU$1 billion or more.
If your company is part of a multinational group with an annual global income of less than AU$ 1 billion, you are not required to complete CbC reporting requirements. However, your company still has to comply with the transfer pricing documentation requirements of Subdivision 815A, B, and C.
The reporting obligation differs if you are an Australian Global Parent Entity (GPE) or an Australian subsidiary of a GPE.
Australia Global Parent Entity
If you are an Australian GPE with global revenue of AU$ 1 billion or more, you are obliged to submit all three documents i.e. CBC Report, Master File and Local File to the Commissioner.
Australian Subsidiary of a GPE
If you are a subsidiary of a GPE, you will be required to assess whether you meet the following criteria to be a Significant Global Entity (SGE):
If you are a SGE, you are obliged to submit the Master File and Local File to the Commissioner. The CbC Report should be exchanged by the Commissioner with the competent Authority of the country where the parent company is located. The diagram below gives an overview of the reporting requirements of the Australian Subsidiary of a GPE.
The CbC reporting requirements will need to be submitted electronically within 12 months after the end of the income year.
The ATO requires a specific format i.e. XML schema to lodge CbC Report, Master File and Local File. Only electronic lodgement is accepted, and your business management software must be used to generate valid XML files. Get the final draft of the XML schema here.
Yes. The ATO published an Exemption Guidance to provide relief to entities who have an obligation to submit CbC Report, Master File or Local File. To apply for an exemption, the entity needs to submit an e-mail request to CbCReporting@ato.gov.au. The request can be applicable for one to three reporting periods.
The written request should outline why the exemption should be given along with the facts and circumstances relevant to the CbC reporting obligations and supporting documents.
The ATO recommends the SGEs to make the exemption request as early as possible to allow enough time for the assessment and notify the SGE for their decision before the statutory due date. The ATO aims to respond within 28 days after receiving all the relevant information.
The ATO has the discretion to provide exemptions to entities from lodging one or more statements for a specified period after considering the particular facts and circumstances and various factors including:
The ATO has set out two types of local files (1) complete local file (2) short form local file. The short form Local File is designed for SGE with no material related party dealings. To qualify, you need to meet at least one of the criteria below:
The ATO’s latest guidance on CbC reporting requirements is set out in the following documents:
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