Country-by-country reporting guidance
Guidance on country-by-country reporting in Australia.
In this section
What is country-by-country reporting
Country-by-country (CBC) reporting is part of a broader suite of international measures aimed at combating tax avoidance. Subdivision 815-E of the Income Tax Assessment Act 1997 represents Australia's CBC reporting regime and implements the recommendations of the 2015 final report of Action 13External Link of the Organisation for Economic Co-operation and Development (OECD)/G20 base erosion and profit shifting (BEPS) project.
CBC reporting incorporates revised standards for:
- transfer pricing documentation
- common template for certain entities to report income
- other measures of economic activity for each country in which they conduct their activities.
The measure balances the need to enhance transparency for these entities, with the cost of providing information to tax authorities for the purposes of assessing transfer pricing and other BEPS-related risks.
Determining whether you have CBC reporting obligations in relation to your income year turns on either your SGE or CBC reporting entity status for a previous period. This will depend on the start date of your income year. The rules apply as follows.
- For income years starting on or after 1 January 2016 but prior to 1 July 2019, CBC reporting applies to entities that were a significant global entity (SGE) for the whole or a part of the previous income year (see Significant global entities – prior to 1 July 2019).
- For income years starting on or after 1 July 2019, CBC reporting applies to entities that were a CBC reporting entity for the whole or a part of the previous income year.
If you were the relevant entity type for the whole or a part of the previous income year and you have a specified connection to Australia, you will be required to provide us with 3 statements required by Australia's domestic CBC reporting regime. They will need to be submitted within 12 months after the end of your income tax year.
These 3 statements are:
- CBC report
- master file
- local file.
The statements disclose information that is relevant to your transfer pricing and BEPS-related risk profile. These include your global and local operations and activities, transfer pricing policies, international related party dealings, revenues, profits, and taxes paid.
In most cases, the CBC report will be filed in the jurisdiction of a multinational group’s CBC reporting parent and automatically exchanged with tax authorities in other jurisdictions in which the group operates.
Australia is one of several countries that have signed a CBC reporting multilateral competent authority agreement (MCAA) (see Multilateral competent authority agreement on the exchange of country-by-country reports (PDF 406KB)This link will download a file and Signatories of the MCAA (PDF 214KB)This link will download a file)This link will download a file. The MCAA facilitates the automatic exchange of CBC reports between tax authorities in participating jurisdictions. There may also be additional jurisdictions where an agreement to exchange CBC reports has been implemented bilaterally outside of the MCAA.
This guidance outlines our administrative practice on CBC reporting to assist you in understanding and meeting your obligations under Subdivision 815-E of the ITAA 1997.
The 3 types of statements required under the CBC reporting regime as represented in Annexes I, II and III to Chapter V of the final report, correspond to:
- master file
- local file
- CBC report.
We have approved forms for each of these statements.
CBC reporting obligations
You will have CBC reporting obligations for an income year if:
- you (including a trust or partnership) were a CBC reporting entity for the whole or a part of the previous income year
- during the income year, you were an Australian resident entity or a foreign entity with a permanent establishment (PE) in Australia
- you are not exempt from providing any CBC reporting statements.
If you are a foreign partnership or foreign hybrid treated as a partnership conducting activities through a permanent establishment in Australia, you have CBC reporting obligations if you were a CBC reporting entity in the preceding year.
You will be a CBC reporting entity for an income year if you are any of the following:
- a CBC reporting parent
- a member of a group of entities consolidated for accounting purposes where another entity of the group is a CBC reporting parent
- a member of a notional listed company group where another entity of the group is a CBC reporting parent.
You will meet your CBC reporting obligations if you lodge your statements within 12 months after the end of the income year to which the statements relate.
If the due date for lodgment falls on a day that is not a business day, you can lodge on the next business day.
SAP transitional period – less or greater than 12 months
An 'income year' for CBC reporting purposes must be a 12-month period. Generally, if you have a transitional period that is less or greater than 12 months because we have approved a substituted accounting period (SAP) and changed your income tax accounting period, the SAP transitional period is not an income year. This is because the SAP transitional period is not a 12-month period.
A SAP transitional period of less than 12 months can arise, for example where we have approved a SAP from a year ending 30 June 2022 to a year ending 31 December 2022. This results in a SAP transitional period of 6 months.
A SAP transitional period of greater than 12 months can also arise, for example where we have approved a change for an 'early balancer' with a year ending 31 December 2020 to a year ending 31 March 2022. This results in a SAP transitional period of 15 months. SAP transitional periods of different lengths can also apply depending on your new SAP balance date that is adopted (see Law Administration Practice Statement PS LA 2007/21).
As a SAP transitional period is not a 12-month period, it is not considered to be an income year under Subdivision 815-E for CBC reporting purposes. Subdivision 815-E will not require CBC reporting for the SAP transitional period.
However in the interests of transparency, and consistent with OECD guidanceThis link will download a file, we request that you still lodge your CBC report, master file and local file for the SAP transitional period.
Your CBC reporting entity status before a SAP transitional period is relevant in determining future CBC reporting obligations. If you were a CBC reporting entity for the income year prior to your SAP transitional period, then you will have CBC reporting obligations for your new substituted accounting period. These CBC reporting statements must be lodged within 12 months after the end of your new substituted accounting period.
Example: acquired entity with a change in SAP to align with the acquiring group
X Co, an Australian resident company, is acquired by Foreign Group Y (with its ultimate parent entity being Foreign Co Y) and is approved for a change to its income tax accounting period to align with the same accounting period as its new parent. This results in a SAP transitional period that is not a 12-month period. X Co will not have CBC reporting requirements for the SAP transitional period. In the interests of transparency, and consistent with OECD guidance, X Co voluntarily lodges a CBC report, master file and local for the SAP transitional period.
End of example
Newly created entity with a SAP – first income year
If you are a newly created entity and you are granted a SAP for your first tax return, the first period is an income year.
A newly created entity will not have CBC reporting obligations for the year it comes into existence. It will not have been a CBC reporting entity in the preceding income year as it did not exist in the preceding year.
New permanent establishment
A foreign entity will have CBC reporting obligations for the income year in which it first operated at or through a permanent establishment in Australia if the foreign entity was a CBC reporting entity for the whole or part of the preceding income year.
Accounting and tax consolidated groups
If you are a member of a group of entities consolidated for accounting purposes and more than one member of the group has a CBC reporting obligation for the income year, you or another member of the group may file the CBC report and master file on behalf of all the members of that group. However, each entity required to lodge a tax return is required to individually file a local file.
A head company of a tax consolidated group or multiple entry consolidated (MEC) group filing a local file will need to include all the required subsidiary member information for the relevant periods of their membership of the tax consolidated group or MEC group during the income year. If you lodge the local file as the head company of a tax consolidated group or MEC group, you will meet the obligations of your subsidiary members for the period of their membership of the group. Similarly, if you lodge a master file or CBC report as the head company of a tax consolidated group or MEC group, you will meet the obligations of your subsidiary members for the period of their membership of the group.
If you join or leave a tax consolidated group or MEC group during an income year, you may have an obligation to lodge a tax return for any period that you were not a member of that group or another group. This is sometimes called a 'stub return'. While the tax return will only reflect matters relevant to the period that you were not a subsidiary member of any tax consolidated group or MEC group, it is nevertheless a tax return for the income year in which the period occurred. If you were a CBC reporting entity for the whole or a part of the previous income year, you must lodge a local file, master file and CBC report for the current income year. The local file needs to include information in relation to you for the period that you were not a subsidiary member of any tax consolidated group or MEC group.
Takeovers, mergers, demergers and other restructures
A restructure during an income year of a group consolidated for accounting purposes may present difficulties in preparing or obtaining a CBC report or master file. The OECD has published guidance on the effect of some restructures on the filing and content of CBC reports – see (section VI) of Guidance on the implementation of country-by-country reporting (PDF 228KB)This link will download a file. If you have had a restructure during a CBC reporting year that is like a scenario described in the OECD guidance, you may look to the principles described in that OECD guidance in determining your obligation to file a CBC report. You may take the same approach in determining any obligation to file a master file and if so, the scope of the group reflected in the master file.
To supplement the OECD guidance, we provide the following advice on some specific scenarios.
If you have CBC reporting obligations because of your membership of a consolidated accounting group in the preceding year, but you left that group during the CBC reporting year due to demerger or being acquired by new owners, we recognise that the former group may not provide access to a CBC report, a master file or the information required to prepare such statements. Our approach to this situation depends on whether you continue to have CBC reporting entity status after leaving the former group.
If you will continue to have CBC reporting entity status after leaving the former group, we will accept that any obligation you have to lodge a CBC report or master file may be satisfied by you (or another entity on your behalf) lodging a CBC report and master file reflecting the new group that includes you.
If you will not be a CBC reporting entity after the restructure we will, on request, provide an exemption from lodging a CBC report or master file. See the section on exemptions.
Local file obligations are generally not affected by restructures. An entity that was a CBC reporting entity in the prior year will have an obligation to lodge a local file for the reporting year. The content of the local file will reflect the nature of transactions during the income year including whether other parties were related parties at the relevant time.
If you are in doubt or are having difficulties, email us at CBCreporting@ato.gov.au