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 Organisation for Economic Co-operation and Development (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 reporting 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 reporting statements must be lodged within 12 months after the end of the reporting period.
Find out about:
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
Lodging CbC reporting statements
What to lodge
CbC reporting statements (CbC report, master file, local file) 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 or accounting software).
You may need to make enquiries with your digital services provider as to whether they support lodging CbC reporting statements with us.
CbC report
The OECD has released an XML Schema (v1.0.1), which is the approved form that must be used to lodge the CbC report. This schema enables the standardised exchange of CbC reports between jurisdictions.
Note: The OECD has also released the XML Schema v2.0 applicable for reporting periods commencing on or after 1 January 2020.
Local file / Master file (LCMSF)
We have developed a combined XML schema for the local file and master file (that is, the LCMSF schema), which is the approved form that must be used to lodge these files.
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, 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 component.
How to lodge
CbC reporting statements must be lodged through one of these channels:
Note: Paper or email lodgments of CbC reporting statements will not be accepted.
What happens when you lodge
When you lodge CbC reporting statements through one of the appropriate channels, you may receive a message from the channel indicating that your lodgment has been successfully submitted.
Note: 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 do not impose new lodgment requirements. They seek to ensure that CbC reporting lodgments accepted by our systems comply with the relevant requirements.
Email confirmation of lodgment
You can also expect to receive an email confirming the outcome of your lodgment within two to three working days. If you have not received an email confirmation within five days of making your lodgment, contact the CbC Reporting teamThis link opens in a new window.
Note: For the first few weeks after 16 March, it may take longer than five days for an email to be received as we will be monitoring system performance. We appreciate your patience while this is occurring.
Penalties will not apply if you have lodged your CbC reporting statements by the due date but have not received the email confirmation until after the due date.
To ensure that an email confirmation 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 email you receive confirming the outcome of your lodgment 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.
- Confirmation that your lodgment has been accepted, however 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 any identifiers (for example, DocRefIDs, MessageRefIDs, CorrDocRefIDs, CorrMessageRefIDs) are in the correct format, as set out in the CbC Reporting XML Schema User GuideExternal Link.
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Information to be included in CbC reporting statements
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 following:
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 as Country-by-Country (CbC) reporting, was enacted in December 2015 to combat tax avoidance.