The terms related-party international dealings and international related parties used in these instructions are defined in appendix 2.
Item 2 also collects information about use of your property, services, funds or any other benefit in your offshore branch operations where your attribution of your income or expenses in relation to the property, services, funds or other benefit is internally recorded as a 'dealing' with your branch operations. Refer to the section titled Permanent establishments in the Introduction of these instructions for more information.
Accordingly, for the purpose of item 2, also treat the reference to a 'party' as though it extended to:
- offshore branch operations carried on by an Australian resident - treat such operations as though they were instead a separate 'party' located in the branch country; and
- Australian branch operations carried on by a non-resident - treat such operations as though they were instead a separate 'party' located in Australia.
Include only dealings between international related parties, and not dealings between you and Australian resident entities. For example, if you received management fees from a foreign subsidiary but incurred costs in Australia to earn those fees, show only the management fees received from the foreign subsidiary.
Show only the gross amounts in columns A and B at this item, in whole dollars. Where, for example, a related-party international dealing involved payments by an Australian taxpayer to an international related party and also receipts from an international related party, show the payments at column A and the receipts at column B. An exception to this general approach applies in the case of certain derivative instruments. See Item 2dOther for more information.
For revenue transactions, unless otherwise specified, include those amounts that you have returned as assessable income or claimed as allowable deductions for the dealing.
For capital transactions, include the amount of the price or proceeds of the transaction including for any deemed acquisition or disposal for income tax purposes.
If you are an Australian resident, include at item 2e the amount of any of your borrowed funds used, but not wholly or directly used, in your offshore branch operations that you have internally recorded as a 'loan' with your branch operations in accordance with:
- if you are an authorised deposit-taking institution (ADI) within the meaning of section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) - Taxation Ruling TR 2005/11 Income tax: branch funding for multinational banks, or
- if you are not an ADI - paragraphs 3.41 to 3.44 of Taxation Ruling TR 2001/11 Income tax: international transfer pricing - operation of Australia's permanent establishment attribution rules.