Country-by-country reporting
Country-by-country (CBC) reporting is part of a suite of international measures aimed at combating tax avoidance, including through comprehensive exchanges of information between participating jurisdictions.
CBC reporting implements Action 13External Link of the Organisation for Economic Co-operation and Development (OECD) / G20 base erosion and profit shifting (BEPS) project.
Australia's domestic CBC reporting regime is represented by Subdivision 815-E of the Income Tax Assessment Act 1997. The legislation was introduced by the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015. It was subsequently amended by the Treasury Laws Amendment (2020 Measures No. 1) Act 2020External Link to ensure closer alignment with the OECD recommendations.
CBC reporting applies to income years commencing from 1 January 2016. It requires certain entities to lodge the following three CBC reporting statements:
- CBC report
- master file
- local file.
These statements include, amongst other things, disclosures regarding:
- the revenues, profits and taxes paid by the global group, broken down by tax jurisdiction
- the operations and activities of the global group to which an entity belongs
- an entity's international related party dealings.
All CBC reporting statements must be lodged within 12 months after the end of the relevant reporting period.
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Lodgment deferral for December balancers
Significant global entities (SGEs) that have a CBC reporting obligation for the year ended 31 December 2019 will be aware that their local file, master file and CBC report are due to be lodged by 31 December 2020.
However, due to the year-end holiday period as well as COVID-19, we are providing a lodgment deferral where SGEs will have until 29 January 2021 inclusive to lodge each of the respective statements for this period.
If you are a tax agent, your eligible SGE clients will automatically receive the lodgment concession. You don't need to take any action to access the lodgment deferral.
Statements not lodged by 29 January 2021 may be subject to penalties.
If you have any questions about meeting your CBC reporting obligations, contact the CBC reporting team.
CBC reporting obligations
CBC reporting applies to entities that were either a CBC reporting entity or SGE for a period prior to their income year. Whether your CBC reporting entity status or SGE status triggers CBC reporting obligations depends on the start date of your income year, as follows:
- For income years starting on or after 1 July 2019, CBC reporting applies to entities that were a CBC reporting entity for the whole or a part of their previous income year.
- For income years starting on or after 1 January 2016 but prior to 1 July 2019, CBC reporting applies to entities that were a SGE for the whole or a part of their previous income year.
CBC reporting entities
A CBC reporting entity is defined in Subdivision 815-E of the Income Tax Assessment Act 1997. An entity is a CBC reporting entity if it is either:
- a CBC reporting parent -- which can be a standalone entity whose annual global income is A$1 billion or more, or a member of a CBC reporting group who is not controlled by another entity in the group and has annual global income A$1 billion or more
- a member of a CBC reporting group, and one of the other group members is a CBC reporting parent.
A CBC reporting group may be a group that is consolidated for accounting purposes as a single group or a notional listed company group.
A notional listed company group is a group of entities that would be required to be consolidated as a single group for accounting purposes if a member of that group were a listed company. An entity that is not consolidated for accounting purposes on the basis that the entity is immaterial is included as part of the notional listed company group.
More information about the CBC reporting entity definition, including the specific rules that define a CBC reporting group by the notional listed company group concept, can be found on the ATO guidance page, CBC reporting entities.
Significant global entities
For income years commencing before 1 July 2019, CBC reporting applies to SGEs, as defined prior to the amendments made by the Treasury Laws Amendment (2020 Measures No. 1) Act 2020. For more information on the definition of SGE prior to the amendments, see Significant global entities – prior to July 2019.
For more information about the definition of SGE following the amendments made by the Treasury Laws Amendment (2020 Measures No. 1) Act 2020, see Significant global entities.
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Lodging CBC reporting statements
CBC reporting statements (CBC report, master file, local file) must be submitted to us using a validly generated XML file. This XML file is usually generated by your business management software (that is, tax reporting or accounting software).
You may need to contact your digital services provider to check whether they support lodging CBC reporting statements with us.
CBC report
The CBC report (referred to in OECD documentation as a 'CbC report') must be lodged in the approved form. The approved form follows the OECD XML schema.
This schema enables the standardised exchange of CBC reports between jurisdictions.
There are two versions of the OECD XML schema:
- OECD schema v1.0.1 – This can be used for all CBC reports lodged prior to 1 December 2020.
- OECD schema v2.0 – This must be used for all CBC reports that are lodged on or after 1 December 2020.
Both versions of the schema are downloadable from Country-by-country XML schema – User guide for tax administrationsExternal Link.
Note: We will be accepting CBC reports that are lodged using OECD Schema v2.0 from 1 October 2020. We are allowing a transitional period up until 30 November 2020, where we will continue to accept CBC reports that have been lodged using OECD Schema v1.0.1.
Local file / master file (LCMSF)
The local file and master file must be lodged in the approved form. The approved form follows the ATO-developed LCMSF XML schema.
The local file and master file may be lodged simultaneously or separately using the same XML file. The CBC report must be lodged separately.
The XML schema also contains questions in relation to your obligation to lodge the CBC report (that is, the CBC report notification).
Amendments
If you need to amend one or more components of your LCMSF lodgment, you must ensure that you resubmit those components in full and not just the section of the components that are being amended.
For example, if you need to correct or add to the Local File Part A, you will need to re-lodge the entire Local File Part A.
How to lodge
CBC reporting statements must be lodged through one of these channels:
Paper or email lodgments of CBC reporting statements will not be accepted.
When you lodge CBC reporting statements through one of the appropriate channels, you will receive a message from the channel indicating that your lodgment has been successfully submitted. This message means that your lodgment has been received. It does not mean that your lodgment has been accepted in our systems, as it will be subject to further validations.
From 16 March 2020, an increased number of data validations will be performed on CBC reporting lodgments before they are accepted. These validations are in addition to the existing LCMSF and CBC reportExternal Link schema validations; however, they don't impose new lodgment requirements. They seek to ensure that CBC reporting lodgments accepted by our systems comply with the relevant requirements.
Lodgment confirmation emails
Due to ongoing systems issues, lodgment confirmation emails are currently not issuing. However, we are working to resolve these issues as a matter of priority, including testing a fix, so that we can issue lodgment confirmation emails as soon as possible.
We are continuing to receive CBC reporting lodgments and don't require you to take any further action at this stage. We will keep you updated about the date we can expect lodgment confirmation emails to issue. We appreciate your continued patience and understanding during this time.
Once these issues are resolved, you can expect to receive a lodgment confirmation email within 2–3 working days. If you don't receive a lodgment confirmation email within 5 days of making your lodgment, contact the CBC reporting teamThis link opens in a new window.
Penalties will not apply if you've lodged your CBC reporting statements by the due date but haven't received the lodgment confirmation email until after the due date.
To ensure a lodgment confirmation email is received, a valid email address must be provided in the lodgment:
- In an LCMSF lodgment, this email address should be provided in the LCMSF21 (Reporting entity email) or LCMSF4 (Intermediary email) fields. If email addresses are provided in both fields, then the email confirmation will be sent to the intermediary.
- In a CBC report lodgment, this email address should be provided in the Contact field. Note that more than one address can be provided in the Contact field. If this occurs, then the email confirmation will be sent to the first email address specified in this field.
Outcome of lodgment
The lodgment confirmation email you receive will be one of the following:
- Confirmation that your lodgment has been accepted.
- Confirmation that your lodgment has not been accepted, with details of the errors that led to the lodgment not being accepted – for further explanation of these errors, see Guidance on lodgment errors.
- Confirmation that your lodgment has been accepted but we have found an issue with one or more entities listed in your lodgment.
- A lodgment may contain other entities which we have been unable to identify due to an incorrect name, tax file number (TFN), Australian business number (ABN) or both. These other entities may include:
- constituent entities within a CBC report
- 'on behalf of entities' within a Master file or CBC report notification (or both).
Hints and tips for lodging
- Check the details of the reporting entity and the details of any entities contained in your lodgment (that is, name, ABN, and TFN). The details of all entities must match the details on our systems.
- For an LCMSF lodgment, check any attachments are in the correct format and have appropriate filenames.
- For the CBC report, check that any identifiers – for example, DocRefIDs, MessageRefIDs, CorrDocRefIDs, CorrMessageRefIDs – are in the correct format, as set out in the Country-by-country reporting XML schema: User guide for tax administrationsExternal Link.
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Information to be included
For the CBC report, we have adopted the information requirements as outlined in Annex III of the OECD guidanceExternal Link on Action 13.
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 local file instructions. New local file instructions are released each year. It is important to make sure you're using the latest version when preparing your local file.
Automatic exchange of CBC reports
Australia is one of over 80 jurisdictions that have signed the CBC reporting Multilateral Competent Authority Agreement (MCAA) to facilitate the exchange of CBC reports between tax authorities in different jurisdictions.
Australia generally sends and receives CBC reports no later than 15 months from the end of the reporting period. No notice of exchange is provided to CBC reporting entities. Relevant multinational groups should presume that exchange is occurring on this timeframe for all constituent entities covered by an activated exchange agreement.
Comprehensive information on the activated exchange relationships between all participating jurisdictions, including Australia, is available on the OECD web page, Country-by-country reporting exchange relationshipsExternal Link. This includes details about the date of effect of an activated agreement. It also lists non-reciprocal jurisdictions that will provide CBC reports to a jurisdiction but have chosen not to receive CBC reports from a jurisdiction.
The MCAA does not facilitate the automatic exchange of local file and master file reports.
In circumstances where the CBC reporting parent (or global parent entity) 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:
In circumstances where the CBC reporting parent (or 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 the CBC report in another jurisdiction that will exchange with Australia. This is sometimes called ‘surrogate parent filing'.
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Supporting material and resources
General guidance
To assist you in meeting your obligations under subdivision 815–E of the Income Tax Assessment Act 1997, our general guidance on CBC reporting outlines our administrative practice, including information on:
- CBC reporting obligations (restructures, accounting and tax consolidated groups)
- exemptions (including transfer relief)
- administrative matters (including extensions, local file administration solution, replacement reporting periods)
- instructions for the CBC report
- instructions for the master file
- instructions for the local file
- document formats.
Legislation
OECD guidance
Other relevant resources
Contact us
If you have any questions or feedback, contact the CBC reporting team at CBCreporting@ato.gov.au
Legislation to implement the OECD's country-by-country (CBC) reporting recommendations was enacted in December 2015 to combat tax avoidance.