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  • Question 18

    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

    This question collects the amounts you have deducted or returned (for Australian tax purposes) for your internally recorded ‘dealings’ with your branch operations. This includes:

    • if you are a non-resident, internally recorded ‘dealings’ with your Australian branch operations
    • if you are a resident, internally recorded ‘dealings’ with or between your overseas branch operations.

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

    These amounts record the attribution of your income and expenses or costs to your branch operations, where the income or expenses or costs were not wholly or directly earned from or incurred in your branch operations. For more information, see Permanent establishments.

    This question does not collect information about amounts you have deducted or returned for actual transactions between different related persons or entities connected with the branch operations of one of those persons or entities. For example, do not show at this question, any amounts for a contract or transaction between you and your Australian resident subsidiary in relation to the offshore branch operations of your subsidiary. These amounts should be shown at the applicable labels in items 3 to 17.

    If you are an authorised deposit-taking institution (ADI) within the meaning of section 995-1 of the ITAA 1997 and are covered by TR 2005/11, include at I items 18a and 18b any funds, used in your Australian or offshore branch operations, that you have internally recorded as a 'loan' with your branch operations that records your attribution of your income or expenditure to the branch operations.

    TR 2005/11 does not apply to Australian branch operations carried on by a foreign bank (or other qualifying financial entity) to which Part IIIB of the ITAA 1936 applies. The foreign bank (or qualifying financial entity) should instead complete question 40 of this schedule in relation to internally recorded ‘loans’ to its Australian branch operations and any internally recorded derivative or foreign exchange covered by section 160ZZZE or section 160ZZZF (unless it has elected under section 160ZZVB of the ITAA 1936 that Part IIIB not apply).

    If you are not an ADI covered by TR 2005/11, include at I and J item 18c the amounts that you have internally recorded for the supply or acquisition of trading stock to or from your branch operations in accordance with paragraph 5.16 of TR 2001/11 Income tax: International transfer pricing – operation of Australia's permanent establishment attribution rules.

    At I and J item 18d, show any other amounts that you have deducted or returned (for Australian tax purposes) for your internally recorded ‘dealings’ with your branch operations, and at L item 18d write a description of the kind of expenditure or cost you have deducted, or income you have returned, for the internally recorded ‘dealings’ for which you included an amount at item 18d.

    A foreign bank (or qualifying financial entity) with Australian branch operations to which Part IIIB of the ITAA 1936 applies should not show at I and J item 18d any amounts taken to be paid under section 160ZZZE or section 160ZZZF. Amounts taken to be paid under section 160ZZZE or section 160ZZZF should only be shown at G to J item 40b.

    More than one amount and description can be included at I, J and L item 18d (the methodology is described below).

    If you have any branch operations, answer Yes at A item 18 and complete the required fields.

    At I item 18a, write the average balance of any internally recorded interest bearing loans from your branch operations.

    At I item 18b, write the average balance of any internally recorded interest bearing loans to your branch operations (excluding amounts to which question 40 of this schedule applies).

    At J item 18a, write the total interest calculated for the internally recorded loans from your branch operations shown at I item 18a.

    At J item 18b, write the total interest calculated for the internally recorded loans to your branch operations shown at I item 18b.

    At K item 18a, write the average balance of internally recorded interest free loans from your branch operations for the purpose of TR 2005/11.

    At K item 18b, write the average balance of internally recorded interest free loans to your branch operations for the purpose of TR 2005/11.

    At I item 18c, write the total purchase costs, claimed for Australian tax purposes, for internally recorded ‘trading stock transfers’ to or from your branch operations.

    At J item 18c, write the total sales proceeds, for Australian tax purposes, from internally recorded ‘trading stock transfers’ to or from your branch operations.

    At I item 18d, write the total costs or expenditure deducted, for Australian tax purposes, for any other internally recorded ‘dealings’ with your branch operations.

    At J item 18d, write the total income or other amounts returned, for Australian tax purposes, for any other internally recorded ‘dealings’ with your branch operations.

    At L item 18d, write a description of what kind of expenditure or cost you have deducted, or income you have returned, for the internally recorded ‘dealings’ with your branch operations for which you included the highest amount at I or J item 18d.

    At item 18d, if you have more than one type of other internally recorded ‘dealings’, show the requested amounts and write the required description for each type separately. That is, record an Amount claimed or an Amount returned, and write a description for each other type of internally recorded ‘dealing’. If you are lodging a paper return, provide this additional information as an attachment to the schedule.

    Example

    If you have incurred particular salary and wages costs in deriving income both from your branch operations in a particular country and from your other operations, and you have chosen to record the attribution of those costs in an internally recorded ‘dealing’ with those branch operations, you should do both of the following:

    • write at I item 18d the amount of those particular salary and wages costs you have deducted for Australian tax purposes
    • write Salary and wages at L item 18d.

    If you are a resident and have entered into a currency forward to hedge foreign currency which is partly used in the course of your overseas branch operations and partly used in your other operations, and you have chosen to record the attribution of the income or loss from the currency forward in an internally recorded ‘dealing’ with those branch operations, you should do all of the following:

    • write at I item 18d the amount you have deducted for Australian tax purposes in attributing the foreign currency forward to your branch operations in the internally recorded ‘dealing’
    • write at J item 18d the amount you have returned for Australian tax purposes in attributing the foreign currency forward to your branch operations in the internally recorded ‘dealing’
    • write Foreign currency forward at L item 18d.
    End of example
    Last modified: 06 Nov 2018QC 55230