• Introduction

    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

    Trigger points that will require completion of this schedule

    If you are a relevant company, partnership or trust, you must complete an International dealings schedule if you have written an amount or Y (for yes) at certain labels in your relevant tax return listed below.

    Company tax return 2013

    Question 6 Calculation of total profit or loss

    J Interest expenses overseas

    U Royalty expenses overseas

    Question 7 Reconciliation to taxable income or loss

    C Section 46FA deductions for flow-on dividends
    P Offshore banking unit adjustment.

    Question 25 International related party dealings/transfer pricing
    Y Was the aggregate amount of the transactions or dealings with international related parties (including the value of property transferred or the balance outstanding on any loans) greater than $2 million?

    Question 26 Overseas interests
    Z Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

    Question 27 Thin capitalisation
    O Did the thin capitalisation provisions apply?

    Partnership tax return 2013

    Question 22 Attributed foreign income
    S Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

    Question 29 Overseas transactions
    W Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property/service transferred or the balance of any loans) greater than $2 million?

    O Did the thin capitalisation provisions apply?

    D Interest expenses overseas

    E Royalty expenses overseas

    Trust tax return 2013

    Question 22 Attributed foreign income
    S Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

    Question 29 Overseas transactions
    W Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property/service transferred or the balance of any loans) greater than $2 million?

    O Did the thin capitalisation provisions apply?

    D Interest expenses overseas

    E Royalty expenses overseas

    Permanent establishments (branch operations)

    Permanent establishment is defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). It includes:

    • business operations carried on by an Australian resident entity at or through a fixed place of business in another country
    • business operations carried on by a foreign resident entity at or through a fixed place of business in Australia.

    Find out more

    For more information, see TR 2002/5External LinkIncome tax: Permanent establishment - What is 'a place at or through which [a] person carries on any business' in the definition of permanent establishment in subsection 6(1) of the Income Tax Assessment Act 1936?

    End of find out more

    Although branch operations are not an 'entity' or 'party' separate from the taxpayer who undertakes those operations, working out the taxable profits of branch operations involves attributing actual income and expenditure of the taxpayer on a separate entity basis. Australia has not adopted the OECD's new ‘functionally separate entity’ approach.

    For income and expenditure of the taxpayer that is not wholly or directly earned from, or incurred in, its branch operations, the income or expenditure may be attributed to branch operations on the basis of internally recorded 'dealings' on the proviso that those records are both of the following:

    • reflect the functions and assets of the business operations carried on at or through the permanent establishment
    • represent the best estimate of branch profits that can be made in the circumstances.

    Find out more

    For more information, see:

    • TR 2001/11 Income tax: international transfer pricing- operation of Australia's permanent establishment attribution rules
    • TR 2005/11External LinkIncome tax: branch funding for multinational banks
    End of find out more

    The information collected at question 18 in this schedule includes what you have internally recorded as dealings between you and your branch operations, and income/gains you have returned or the expenses/losses you have claimed in respect of those internally recorded dealings. In the schedule and instructions, unless otherwise stated, a reference to your branch operations includes:

    • business operations carried on by an Australian resident entity at or through a fixed place of business in another country
    • business operations carried on by a foreign resident entity at or through a fixed place of business in Australia.

    International related party dealings do not include any 'dealings' with your own branch operations

    Questions 2 to 17 collect information in connection with your international related party dealings.

    'International related party dealings' are international transactions, agreements or arrangements between two or more related persons that can be subject to section 136AD of the ITAA 1936 or the associated enterprises article of a relevant double tax agreement (DTA); for example, an agreement with your foreign subsidiary. 'International related party dealings' will therefore not include any 'dealing' with your own branch operations.

    There is more detail about the meaning of 'international related party dealings' in the Definitions section at the end of these instructions.

    Last modified: 12 Feb 2014QC 35686