Country-by-Country (CbC) reporting facilitates global exchange of information between tax authorities to combat tax avoidance.
The measure took effect from tax years beginning 1 January 2016. It requires Significant Global Entities (those part of a global group with revenue of more than AUD$1B) to lodge some or all of the following three statements (CbC statements):
Country-by-country report
Master file
Local file (short form or long form)
These statements contain details regarding the international related party dealings, revenues, profits and taxes paid by jurisdiction and are due for lodgement 12 months after the end of the relevant reporting period.
The complexity of the statements required to be lodged van differ substantially depending on the nature and volume of dealings with international related parties, and the nations where these parties are based.
The Commonwealth Government passed legislation in 2015 that resulted in significant new disclosure requirements for many entities that previously prepared special purpose financial statements (SPFS).
The legislation requires an Australian entity that is part of a larger global group with a consolidated revenue greater than AUD$1B and that doesn’t already lodge general purpose financial statements (GPFS) with ASIC, to lodge GPFS with the ATO. Based on guidance from the ATO, these GPFS can be prepared under tier 2 reduced disclosure requirements (RDR).
From 1 July 2017, the tax penalties for significant global entities failing to lodge approved documents on time increased to $105,000 (late 28 days or less) through to $525,000 (late 113 days or more). Some of the key differences in required disclosures under GPFS (Tier 2 RDR) compared to SPFS and the impact to fees in respect of these are summarised below.
Tax
Breakdown of income tax expense (i.e. current vs deferred)
Reconciliation of income tax expense to prima facie income tax
Aggregate amounts recognised directly in equity
Aggregate amounts recognised directly in OCI
Deferred tax assets not recognised
Breakdown of deferred tax balances by type of temporary differences
Related parties
Key management personnel and compensation paid by the entity in total
Other related party disclosures, which primarily require disclosure of:
Nature of related party relationships
Amount of related party transactions
Amount of outstanding balances, including commitments and their terms and conditions
Non-financial assets & liabilities
Breakdown of income tax expense (i.e. current vs deferred)
Reconciliation of income tax expense to prima facie income tax
Aggregate amounts recognised directly in equity
Aggregate amounts recognised directly in OCI
Deferred tax assets not recognised
Breakdown of deferred tax balances by type of temporary differences
Financial assets & liabilities
Information that enables users of the financial statements to evaluate the significance of financial instruments
Specific amounts recognised in profit or loss and other comprehensive income
Secured liabilities
Loans payable -defaults and breaches
Finance lease liabilities
Limited fair value information where assets and liabilities measured subsequently at fair value
Other disclosures
Information about each significant class of revenue recognised
