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 MT 2008/2 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.
We have provided additional guidance on when a transfer pricing position is a Category A RTP, including on when a transfer pricing position is material.
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 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. 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.
You will be required to disclose a Category B position where the provision and/or contingent liability (asset) in the financial statements for the current year:
- is raised in the current reporting period
- was raised in a prior reporting period and has not been disclosed previously (because you were not required to lodge an RTP schedule)
- was raised in prior reporting periods, the amount of the provision/contingent liability has increased in your or a related party's financial statements, and that increase has not been disclosed previously because it either increased in the current year or in a year you did not have to lodge an RTP schedule.
You only have to disclose a Category B RTP if it is material.
You are not required to disclose a Category B position where the same provision and/or contingent liability (asset) has been disclosed in a prior year RTP schedule and the amount has not increased since that disclosure.
See FAQ on Category B for further explanation on when a category B disclosure is not required.
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.
Category C questions that reference a taxpayer alert may ask you to disclose:
- arrangements with particular characteristics, or
- arrangements described in the taxpayer alerts.
For Category C questions that describe an arrangement with particular characteristics and refer to a taxpayer alert for further guidance, you must disclose the arrangement even when:
- your arrangement is not covered by the examples in the taxpayer alert, or
- the mischief described by the taxpayer alert is not present in your arrangement.
For Category C questions that ask about arrangements described in a taxpayer alert, you will need to interpret the question widely and make a disclosure regardless of whether:
- some features of your arrangement are different to the features described in the examples provided in the relevant taxpayer alert
- your arrangement does not contain all features of the arrangement(s) described in the taxpayer alert
- you do not view the arrangement to be aggressive, inappropriate, contrived artificial
- you do not consider a tax benefit arose from the arrangement
- there is an observable third party market or long standing practice for this arrangement.
Reportable tax position schedule instructions 2018
These instructions help you complete the Reportable tax position schedule 2018 (NAT 74066, PDF 1.72MB)This link will download a file
The Reportable tax position schedule 2018 may be completed online if you enable JavaScript. Once you have enabled JavaScript, changes can be saved to your computer.
When you have completed the schedule, you must follow these instructions to lodge it.
What you must do
If we have notified you in writing that you must lodge a reportable tax position schedule, you must:
- answer Yes at item 25 of the Company tax return 2018 (NAT 0656)
- complete the Reportable tax position schedule 2018 (NAT 74066) – the schedule.
See also:
We have prepared an instructional webinar for completing and lodging the RTP schedule, which you can access hereExternal Link.
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