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  • BDO feedback - Expansion of the Reportable Tax Position Schedule to large private companies and corporate groups consultation paper

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    Dear Sir/Madam,

    ATO CONSULTATION: EXPANSION OF THE REPORTABLE TAX POSITION SCHEDULE TO LARGE PRIVATE COMPANIES AND CORPORATE GROUPS

    We refer to the Australian Taxation Office’s invitation to consult on the Expansion of the Reportable Tax Position (RTP) Schedule to large private companies and corporate groups.

    1. Does the proposed start time of the income year ended 30 June 2020 give sufficient time to prepare, considering the forms will be due in early 2021?

    BDO recommend that the proposed start time should be postponed for one year from 30 June 2020 to 30 June2021. BDO further suggest that there be an extensive education process for the large private groups and their advisors of exactly what is required for the preparation of the RTP.

    2. Do you have any concerns with the proposed thresholds that determine who in the large private market will be required to lodge the RTP schedule?

    BDO does not have any concerns with the proposed thresholds. BDO considers that the expansion of the RTP to Australian large private groups is reasonable as it aligns it with public companies and foreign owned groups and creates a level playing field for similar sized entities/groups.

    3. Are there any concerns with applying the income tests during the year of lodgement?

    BDO recommend that the determination of whether the RTP rules apply during the current year of lodgement may be problematic for some private groups, particularly in the first year that they pass the income thresholds. The company or group may not know whether it has passed the income threshold until the accounts and tax returns have been prepared, by which time it may be difficult to then identify all the RTPs in time to lodge the RPT schedule with the current year’s tax return.

    Many private groups do not have in-house tax resources and many of their external tax advisors may be in smaller accounting firms that do not have the experience or preparing RTP schedules. The private groups and their tax advisors may need to obtain advice from larger accounting or legal firms to identify what RTPs their clients have and may need assistance in preparation of the RTP schedules. BDO suggest the income thresholds for the first year that the RTP schedule is required should relate to the immediate prior year’s income of the company and/or group and not the current year.

    The above suggestion for large private groups in relation to the first year of applying the income rules to relate to the income for the immediate prior year instead of the current year could also be made applicable for all large entities.

    4. Under what circumstances should the ATO provide an exemption for the lodgement of an RTP schedule or the disclosure for certain types of disclosures specific to large private groups?

    N/A.

    5. Do you see any challenges in applying RTP Category C questions to companies in large private groups such as areas of tax law that may not be suitable for an RTP Category C question?

    N/A

    6. What are the difficulties in detecting and disclosing arrangements that were set up in earlier years?

    N/A.

    Should you have any questions, or wish to discuss any of the comments made in our submission, please do not hesitate to contact me on 02 9240 9736 or lance.cunningham@bdo.com.au.

    Yours sincerely

    Lance Cunningham

    BDO National Tax Director

    BDO Australia

      Last modified: 20 Dec 2019QC 60850