A reportable tax position (RTP) is one or more of the following:
- Category A: a position that is about as likely to be correct as incorrect, or less likely to be correct than incorrect
- Category B: a position in respect of which uncertainty about taxes payable or recoverable is recognised and/or disclosed in the taxpayer's financial statements or a related party's financial statements
- Category C: a reportable arrangement.
Category A: Tax uncertainty in your income tax return
A Category A RTP is a position where it would be concluded in the circumstances, having regard to relevant authorities, that what is argued for is about as likely to be correct as incorrect, or is less likely to be correct than incorrect.
This does not include a position where you have exercised reasonable care and concluded in the circumstances, having regard to relevant authorities, that what is argued for is more likely to be correct than incorrect.
For the purposes of the schedule, the phrases ‘about as likely to be correct as incorrect’, ‘more likely to be correct than incorrect’, and ‘relevant authorities’ take their meaning from MT2008/2 Shortfall penalties: administrative penalty for taking a position that is not reasonably arguable. A position that is about as likely to be correct as incorrect is a Category A RTP even though it is reasonably arguable.
You must have regard to all matters relevant to the position – this includes anti-avoidance rules, integrity provisions, transfer pricing and market valuations.
You must disclose a material position that does not have regard to relevant authorities, or if there are none, that is not based on a well-reasoned construction of the applicable statutory provision. You must disclose such a material position even if it is based on administrative or industry practice.
Category B: Tax uncertainty in financial statements
A Category B RTP is a position in respect of which uncertainty about taxes payable or recoverable is recognised and/or disclosed in the your or a related party's financial statements.
Uncertainty about taxes payable or recoverable exists where there is a difference between your position and the measurement and/or recognition of the taxes payable or recoverable in respect of that position as adopted in your or a related party's financial statements. A Category B RTP is material if this difference is equal to or exceeds your materiality amount. You only have to disclose a Category B RTP if it is material.
Taxes payable or recoverable exist where an income tax-related provision, current tax liability (asset) and/or contingent liability (asset) is recognised and/or disclosed in accordance with accounting principles in your or a related party’s financial statements.
Where an income tax-related provision, current tax liability (asset) and/or contingent liability (asset) was recognised and/or disclosed in your or a related party’s financial statements in a prior income year, taxes payable or recoverable will exist where the recognition or disclosure of that item has increased in your or a related party’s financial statements in the 2016–17 income year.
The concepts of 'recognition', 'measurement' and 'disclosure' are to be given meanings in accordance with accounting principles.
Category C: Reportable arrangements
You must disclose a Category C RTP if you answer yes to any of the questions covered by Category C. Note, there are no materiality thresholds for Category C RTPs.
Unless otherwise specified, the questions refer to the arrangements and/or transactions taking place in the income year covered by the tax return that your RTP schedule accompanies.
RTP Category C is updated throughout the year. We recommend you use the electronic version of this document to ensure that you are reporting on the most up to date list of RTP Category C questions.
The list of Category C questions can be found at RTP Category C questions. You do not have a Category C RTP reporting obligation for income years that ended on or before 29 June 2017.