Show download pdf controls
  • Question 4

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    To evaluate any potential compliance risks in respect of Australian taxpayers' international related party dealings in specified countries, we need to understand the nature of these dealings. Therefore, we seek to identify the principal activities undertaken by Australian taxpayers and related parties in specified countries, where these activities are mainly undertaken and the extent/significance of these activities.

    The dollar amounts or values asked for in this question are all based on your accounting records.

    Only dealings conducted on your own behalf need to be taken into account in your answer to this question. Do not include dealings on behalf of your clients.

    Example

    A financial services entity enters into a currency swap with its related foreign subsidiary on behalf of its customer. The entity does not include at this question the amounts directly payable or receivable under the swap because it has not entered into the swap with its foreign subsidiary on its own behalf. However any service fee or amount receivable by the entity from their foreign subsidiary in connection with the transaction (for example, an arrangement fee) would be an international related party dealing that the entity would include in its answer to this question.

    The amounts reported at this question may be reported in the financial statements as revenue/gains or expenses/losses, depending on the accounting treatment of the relevant item (for example, for derivatives you may report revenue/expenses from net cash flows and/or you may report a gain/loss in fair value). Therefore for the purposes of this question, the terms 'expenditure' and 'losses' are interchangeable and the terms 'revenue' and 'gains' are interchangeable.

    Further Information

    For more information about how to determine the amounts to be included in respect of derivatives, refer to the instructions for question 9.

    End of further information

    To complete this question, you need to:

    • identify all your international related party dealings located in specified countries during the income year
    • group your dealings according to the country where the related party is located
    • total the dollar value of your dealings (expenses/losses plus revenue/gains, excluding principal and principal repayment amounts) for each country
    • determine the three countries that have the highest dollar value of related party dealings
    • then, in respect of the three countries with the highest dollar value of international related party dealings, group the dealings in each of the countries according to activity type
    • total the dollar value of your dealings (expenses/gains plus revenue/losses, excluding principal and principal repayment amounts) for each activity type
    • calculate the three activity types with the highest dollar value for each of the three countries.

    If you had related party dealings with entities in any of the specified countries listed in Appendix 1, during the income year, answer 'Yes' at label A of this question and complete the required label fields.

    At labels B, H and N, write the Appendix 1 codes for the three specified countries with the highest dollar values for your dealings with international related parties located in specified countries. Write these codes in descending order of total dollar value.

    At labels C, I and O, write the Appendix 4 codes for each of the three activity types with the highest dollar value for your international related party dealings for each of the three specified countries. Write these activity codes in descending order of total dollar value for each of the three activity types for each specified country.

    At labels D, J and P, write the total amount of expenditure/losses incurred (excluding principal and principal repayment amounts) for each of the activity types for the specified country for which you have written the activity code (at labels C, I and O).

    At labels E, K and Q, write the total amount of revenue/gains earned (excluding principal and principal repayment amounts) for each of the activity types for the specified country for which you have written the activity code (at labels C, I and O, respectively).

    At labels F, L and R, write the total of all other amounts of expenditure/losses for international related party dealings for the relevant specified country for which you have written the country code (at labels B, H and N, respectively).

    At labels G, M and S write the total of all other amounts of revenue/gains for international related party dealings for the relevant specified country for which you have written the country code (at labels B, H and N, respectively).

    Further Information

    For the list of:

    End of further information

    Example

    During the income year an Australian taxpayer undertook the following dealings with entities located in specified countries.

    Activity

    Relation to taxpayer

    Country entity located

    Expenditure amounts

    Revenue amounts

    Total dollar values

    Derivatives

    100% subsidiary

    Andorra

    3,190,000

    4,220,000

    7,410,000

    Derivatives

    na

    Andorra

    1,300,000

    490,000

    1,790,000

    Derivatives

    100% subsidiary

    Belize

    2,145,000

    3,760,000

    5,905,000

    Derivatives

    100% subsidiary

    Niue

    600,000

    500,000

    1,100,000

    Securitisation

    100% subsidiary

    Niue

    6,000,000

    8,500,000

    14,500,000

    Securitisation

    100% subsidiary

    Panama

    900,000

    450,000

    1,350,000

    Attention

    The expenditure incurred and revenue earned by the Australian taxpayer undertaking derivative transactions with unrelated parties in Andorra is disregarded in determining the total value of derivative transactions.

    End of attention

    The Australian taxpayer extracts the relevant data from the information above.

    Activity

    Activity code

    Total expenditure amount

    Total revenue amount

    Total dollar value

    Derivatives

    9

    5,935,000

    8,480,000

    14,415,000

    Securitisation

    25

    6,900,000

    8,950,000

    15,850,000

    The main activity types undertaken by the Australian taxpayer and related parties located in specified countries are securitisation and derivatives.

    With this information the Australian taxpayer completes question 4 as follows:

    With this information the Australian taxpayer completes question 4

    Last modified: 08 Aug 2014QC 26054