Country-by-Country reporting
Country-by-Country (CbC) reporting is part of a wide range of international measures aimed at combating tax avoidance through more comprehensive exchanges of information between countries. CbC reporting implements Action 13External Link of the OECD/G20 Base erosion and profit shifting (BEPS)External Link action plan.
Amending legislation (Schedule 4 to the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015) implementing CbC reporting in Australia was passed in December 2015. The legislation is contained in Subdivision 815-E of the Income Tax Assessment Act 1997.
The measure takes effect from income years commencing on or after 1 January 2016. It requires certain entities to lodge the following three CbC statements:
- CbC report
- master file
- local file.
These statements contain details regarding the international related party dealings, revenues, profits, and taxes paid by jurisdiction. All CbC statements must be lodged within 12 months after the end of the reporting period.
Lodgment deferral for December balancers
Significant global entities (SGEs) that have a CbC reporting obligation for the year ended 31 December 2018 will be aware that their local file, master file, and CbC report are due to be lodged by 31 December 2019.
Due to the year-end holiday period, we are providing a lodgment deferral, and SGEs will have until 15 January 2020 inclusive to lodge each of the respective statements.
Note that statements not lodged by 15 January 2020 may be subject to penalties. Lodgments can only be made electronically via portals using the file transfer facility or SBR using SBR-enabled software. Lodgments via email will not be accepted.
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CbC reporting
CbC reporting applies to particular types of significant global entities (SGE). An entity is an SGE for an income year if it is either:
- a global parent entity with annual global income of A$1 billion or more
- a member of a group of entities consolidated (for accounting purposes), where the global parent entity has an annual global income of A$1 billion or more.
This definition includes:
- Australian-headquartered entities (with or without foreign operations)
- the local operations of foreign headquartered multinationals.
If global financial statements have not been prepared for the global parent entity, the Commissioner of Taxation may make a determination that based on information available, the annual global income of the entity would be A$1 billion or more for the period.
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Reporting requirements
Electronic lodgment
CbC reporting statements must be submitted to us using a valid generated XML file. This XML file is usually generated by your business management software (that is, tax reporting / accounting software).
You may need to make enquires with your software provider as to whether they support lodging CbC reporting statements with us.
CbC statements must be lodged through one of these channels:
Note: Paper or email lodgments of CbC statements will not be accepted.
See also:
CbC report
The Organisation for Economic Co-operation and Development (OECDThis link opens in a new window) has released an XML Schema (v1.0.1) for the standardised exchange of CbC reports between jurisdictions.
Master file / local file
Combined XML schema
We have developed a combined XML schema for the master file and local file that must be used by your business management software, tax reporting / accounting software) to generate a valid lodgment (that is, an XML file).
The local file and master file may be lodged simultaneously or separately using the same XML file. The CbC report must be lodged separately.
Information requirements
For the master file, we have adopted the information requirements as outlined in Annex I of the OECD guidanceExternal Link on Action 13.
For the local file, refer to the following:
The XML schema also contains questions in relation to your obligation to lodge the CbC report.
Penalties
Administrative penalties for statements and failure to lodge on time (FTL) penalties have increased as of 1 July 2017 for SGEs.
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Automatic exchange of CbC reports
Australia is currently one of 77 jurisdictions that have signed the CbC Multilateral Competent Authority Agreement (MCAA) to facilitate the exchange of CbC reports between tax authorities in different jurisdictions. However, the CbC report can only be exchanged between Australia and another signatory when each jurisdiction has activated exchange with the other.
You can find out whether exchange relationships are activated between jurisdictions and the period for which exchange will first occur on the OECD websiteExternal Link.
The MCAA does not facilitate the automatic exchange of local file and master file reports.
In circumstances where the global parent entity (GPE) operates in a jurisdiction that is not a party to the MCAA, exchange can still occur under bilateral agreements, including Australia's tax treaties and Tax information exchange agreements.
Australia currently has bilateral exchange arrangements in place with the United States.
In circumstances where the global parent entity operates in a jurisdiction that does not have an active exchange relationship with Australia for the CbC report, the global group could choose to file in another jurisdiction that will exchange with Australia. This is sometimes called ‘surrogate parent filing.’
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Supporting material and resources
For any questions or feedback, contact the CbC Reporting team CbCReporting@ato.gov.au
Law Companion Ruling
Our Law Companion Ruling (LCR) 2015/3 describes how we will apply the CbC reporting law contained in Subdivision 815-E of the Income Tax Assessment Act 1997.
Paragraphs 1–39 of this guideline are a public ruling. If you rely on these paragraphs in good faith, you will not have to pay any relevant penalties.
See also:
- LCR 2015/3 Subdivision 815-E of the Income Tax Assessment Act 1997: Country-by-Country reporting
General guidance
Our general guidance on CbC reporting outlines our administrative practice, including advice to assist you in understanding and meeting your obligations under subdivision 815–E of the Income Tax Assessment Act 1997.
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Legislation
OECD guidance
Media releases
Other relevant resources
Legislation to implement the OECD's new transfer pricing standards – commonly referred to a Country-by-Country (CbC) reporting – was enacted in December 2015.