Guide to RTP Category C
This webpage provides guidance on RTP Category C to taxpayers completing RTP Category C as part of the top 1000 pilot.
On this page
The information on this page should be used as guidance where you are disclosing current or prior year positions covered by Category C of the Reportable Tax Position (RTP) Schedule as part of a streamlined assurance review.
RTP Category C covers a number of specific issues that are of concern. Generally the ATO would have alerted the public to these issues through a taxpayer alert, ruling, tax determination, practical compliance guidance or a law companion guide.
RTP Category C asks you to disclose reportable arrangements based on a series of closed answer questions relating to specific tax issues.
We have developed this guide and the RTP Category C form to make it easier for you to disclose Category C positions as part of your response to the ATO request for information.
We will use the disclosures to:
- help us focus the streamlined assurance review through expediently identifying tax risks relevant to you
- improve our dialogue with you about your risk profile and corporate governance framework
- gain justified trust on your tax positions
- identify areas of uncertainty in the tax law that may need further advice and guidance by us.
- enhance the risk-based choices we make to prioritise our work
Download the form and complete it using the guidance and instructions in this guide.
You can download this form in Portable Document Format (PDF) - download the Reportable tax position Category C form NAT 74997(PDF, 1.4MB)This link will download a file
RTP Category C questions
You need to consider each Category C question and disclose each Category C position in the way specified in this table.
When answering Category C questions, you will need to note that:
- there are no materiality thresholds for Category C positions
- unless otherwise specified, the questions refer to the arrangements and/or transactions taking place in the income year(s) covered by the streamlined assurance review.
You have to answer yes to an RTP Category C question if your arrangement is covered by the question, even if:
- you do not consider a tax benefit arose from the arrangement
- you do not consider that the arrangement is contrived or artificial
- there is an observable third party market or long standing practice for this arrangement
- the features of your arrangement are different to the features described in the examples provided in the relevant taxpayer alert. Disclosure will be required where the arrangement is a type of arrangement or variation of an arrangement described in that taxpayer alert.
Question 1
Did you claim a deduction under section 25-90 of the Income Tax Assessment Act 1997 (ITAA 1997) that was incurred in earning income that is non-assessable and non-exempt under both section 23AH of the Income Tax Assessment Act (ITAA 1936) and section 768-5 of the ITAA 1997?
Refer to Taxation Determination TD 2016/6 for further guidance.
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Record 1 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 2
Did you fund a special dividend or a share buy-back through an equity raising event at a similar time, where the arrangement is a type of arrangement or variation of an arrangement described in Taxpayer Alert TA 2015/2?
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Record 2 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 3
Have you entered into any arrangement(s) or variation of an arrangement described in Taxpayer Alert TA 2015/5 involving the use of offshore entities which source goods (procurement hubs)?
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Record 3 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 4
Did you recognise (in the current or last four years) any internally generated intangible assets or revalue an intangible asset(s) for the purposes of your thin capitalisation calculations using an arrangement or variation of an arrangement described in Taxpayer Alert TA 2016/1?
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Record 4 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 5
If you are a significant global entity as defined by section 960-555 of the ITAA 1997, have you entered into a restructure affecting any entities making supplies into Australia after 11 December 2015?
Refer to Law Companion Guideline LCG 2015/2 for further guidance.
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Record 5 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 6
Have you entered into a transaction(s) involving related party foreign currency denominated finance with related party cross currency interest rate swaps using an arrangement or variation of an arrangement described in Taxpayer Alert TA 2016/3?
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Record 6 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 7
Have you entered into any arrangement(s) or variation of an arrangement described in Taxpayer Alert TA 2016/4 involving cross-border leasing of mobile assets where related legal entities are interposed between the foreign owner and Australian operator?
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Record 7 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 8
If you are an Australian income tax consolidated group, do you have an offshore permanent establishment which has allocated expenses associated with an intra-Australian group transaction where the circumstances of the arrangement are similar to the circumstances in Taxpayer Alert TA 2016/7?
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Record 8 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 9
If you have related party dealings involving a marketing hub arrangement(s), disclose the outcome you have self-assessed in accordance with Practical Compliance Guidelines PCG 2017/1:
- Subcategory 1: white zone
- Subcategory 2: green zone
- Subcategory 3: blue zone
- Subcategory 4: yellow zone
- Subcategory 5: amber zone
- Subcategory 6: red zone or have not applied PCG 2017/1
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Record 9 in RTP Category C question field on the RTP form.
Record the subcategory number of your RTP in the subcategory box.
You will need to repeat this process for each of your marketing hub arrangements. Each arrangement will require a separate RTP Category C question 9 disclosure.
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Question 10
Have you excluded from your thin capitalisation calculations of debt capital (in the current or last four years) any value of a ‘debt interest’ that has been treated wholly or partly as equity under accounting standards using an arrangement or variation of an arrangement described in Taxpayer Alert TA 2016/9?
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Record 10 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 11
Are you currently involved in a cross-border round robin financing arrangement or variation of an arrangement described in Taxpayer Alert TA 2016/10?
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Record 11 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 12
Did you enter into or continue to participate in an arrangement involving a corporate tax entity and a flow-through trust with common (or substantially common) ultimate owners, where the corporate tax entity makes payment(s) to the flow-through trust entity where the arrangement is a type of arrangement or variation of an arrangement described in Taxpayer Alert TA 2017/1?
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Record12 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 13
Have you entered into transactions involving activities registered under the R&D tax incentive using an arrangement or variation of an arrangement described in Taxpayer Alert TA 2017/3?
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Record 13 in RTP Category C question field on the RTP form.
Leave subcategory field blank.
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Question 14
If you have financial arrangement(s) involving cross border related party debt funding, disclose the outcome you have self-assessed in accordance with Schedule 1 of the Practical Compliance Guideline PCG 2017/4.
- Subcategory 1: white zone
- Subcategory 2: green zone
- Subcategory 3: blue zone
- Subcategory 4: yellow zone
- Subcategory 5: amber zone
- Subcategory 6: red zone or if you have not applied PCG 2017/4
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Record 14 in RTP Category C question field on the RTP form.
Record the subcategory number of your RTP in the subcategory box.
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Question 15
If you claimed deductions for exploration expenditure, disclose whether your governance and/or claims have been reviewed under one of the following subcategories:
- Subcategory 1: a registered company auditor, or the ATO has performed the agreed upon procedure within the past year, and there has been no material change to your policies and procedures, or application of these.
- Subcategory 2: the ATO has conducted a review of your exploration claims in the past year and provided a low risk rating, and there has been no material change to your policies and procedures, or application of these.
- Subcategory 3: None of the above apply.
Refer to Agreed Upon Procedures: Applying the Practical Compliance Guideline PCG 2016/17 ATO compliance approach – exploration expenditure deductions
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Record 15 in RTP Category C question field on the RTP form.
Record the subcategory number of your RTP in the subcategory box.
Do not record subcategory 1 until the Agreed Upon Procedures: Applying the Practical Compliance Guideline 2016/17 – exploration expenditure deductions is published on our website.
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Instructions
This section provides an explanation of the fields in the linked form and must be read in conjunction with the instructions for answering individual Category C questions.
Did you have any Category C reportable tax positions (RTPs) for the period of review?
- if you do not have any Category C RTPs that you must disclose on the form select No
- if you have one or more Category C RTPs that you are disclosing on the form, select Yes.
How many Category C reportable tax positions (RTPs) are you reporting?
- disclose the total number of Category C RTPs you are reporting
- you will need to follow the instructions for answering individual Category C questions to ensure you make a complete disclosure.
RTP Category C number
Give a number to your Category C position. If you have five positions the positions should be numbered one to five.
Have you discussed this position with the ATO?
- if you have discussed the RTP with the ATO, select Yes
- if you had not, select No from the drop-down box.
RTP Category C questions
Enter the number of Category C RTPs that you are disclosing in this field.
RTP Category C subcategory
Where a question requires you to enter a subcategory, enter the relevant subcategory in this field.
Definitions and frequently asked questions
Definitions
Related party
Related party has the meaning given by section 228 of the Corporations Act 2001.
If you are a proprietary company, apply the meaning given by section 228 as if you were a public company.
Substantially common ownership
The ownership of two or more entities is substantially common where at least 50% of the securities in each entity are held by the same ultimate owners.
Frequently asked questions
Do I have to disclose positions the ATO knows about?
You are required to disclose all Category C positions, even if you think we already know about the position. The only exclusions are where:
- you have already applied to us for a private ruling that covers the position
- the RTP is covered by an APA or an application for an APA that has been accepted into our APA program.
Examples – disclosing positions on the RTP Category C form
The following examples will help you make Category C disclosures.
Example 1: Category C position
AusCo enters into an arrangement whereby capital is raised from shareholders in order to fund the payment of a special dividend to shareholders.
This arrangement is an RTP covered by Question 2 of Category C. The required information to be provided on the RTP Category C form for this position is as follows:
RTP Category C question
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2
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RTP Category C subcategory
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Optional comments
It is not compulsory to complete the optional comments section and AusCo chooses not to provide any optional comments.
End of example
Example 2: Category C position
An Australian mining company (AusCo) has a related party in Thailand (ForCo). ForCo sells minerals on behalf of other members in the Group (including AusCo) to third parties in Malaysia, for which it is remunerated on a commission basis by the members including AusCo.
In considering PCG 2017/1, AusCo identifies that it is involved in an offshore marketing hub arrangement and the arrangement falls in the blue zone.
Marketing hub arrangements are covered by Question 9 of Category C, with the blue zone covered by subcategory 3.
The required information to be provided on the RTP Category C form for this position is as follows:
RTP Category C question
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9
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RTP Category C subcategory
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3
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Optional comments
Offshore marketing hub arrangement is in relation to export of zinc from Australia to Malaysia.
Note: it is not compulsory to complete the optional comments section.
End of exampleMore information
For more information on Reportable Tax Positions and for assistance in completing the form please speak to your case officer or email ReportableTaxPosition@ato.gov.au
This webpage provides guidance on RTP Category C to taxpayers completing RTP Category C as part of the top 1000 pilot.Last modified: 16 Apr 2018QC 55126