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  • Significant global entity definition amendment

    The government announced the Company tax – significant global entity definition amendment measure in the 2018–19 federal Budget.

    The associated legislation, the Treasury Laws Amendment (2020 Measures No. 1) Act 2020, broadens the definition of significant global entity (SGE) in the tax law so that it:

    • applies to groups of entities headed by an entity other than a listed company in the same way as it applies to groups headed by a listed company
    • applies despite exceptions to when a group of entities must prepare consolidated accounts, including materiality rules, in the applicable accounting rules.

    The amendments also modify the rules that identify which entities must provide country-by-country (CBC) reporting statements under the tax law. This is to ensure these rules align with Australia’s international commitments.

    The amendments made by Schedule 1 apply in relation to income years or periods commencing on or after 1 July 2019. However, penalties that arise from the measure do not apply until 1 July 2020 for entities that were not previously SGEs.

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    Consequences of the amendments

    If you were not an SGE in previous income years but are now in scope of the amended SGE definition, for income years commencing from 1 July 2019 you may be subject to the Multinational Anti-Avoidance Law and the Diverted Profits Tax. You may also be subject to the increased penalties that apply to SGEs in the future.

    If you meet the new definition of a CBC reporting entity, you will have CBC reporting obligations for income years commencing from 1 July 2019.

    You may also be required to give the Commissioner of Taxation general purpose financial statements if you do not already lodge such statements with the Australian Securities and Investments Commission.

    See also:

      Last modified: 05 Jun 2020QC 62783