Findings report RTP – Public and multinational businesses

About this report

In this report we provide the aggregated disclosures made by large public and multinational companies for the 2020–21 to 2023–24 income years under Category C of the reportable tax position (RTP) schedule as of 30 June 2025. Further lodgments of RTP schedules after this date will not be included for this report.

The data provides insights as to the prevalence of key corporate tax risks in relation to large public and multinational entities. The range of risk levels can vary across the lodging population. We consider and verify the level of risk reported as part of our compliance program. Generally, this corresponds with our assessment of the disclosed arrangements.

RTP disclosures are provided to our specialist tax performance teams and reviewed under our compliance and assurance programs. These include the Top 100 Justified Trust program, the Top 1,000 Combined Assurance program and the Top 1,000 Next Actions program.

We monitor the lodgment of the RTP schedule to ensure RTP obligations are met. RTP disclosures help us understand and assess changes in tax positions and arrangements, including new arrangements taxpayers are entering into. The disclosures also assist us to prioritise our assurance activities.

We tailor our compliance approach to the risk rating disclosed by taxpayers. Taxpayers who have achieved justified trust (high assurance) will have a less intensive engagement approach however, we continue to monitor and verify their RTP disclosures.

We apply more intensive scrutiny for high-risk disclosures to determine if they comply with the relevant legislative provisions. If we can’t gain this assurance at the review stage, we may undertake an audit or more intensive investigation through our assurance programs.

For more information about:

• how we use RTP disclosures and our assurance programs, see RTP and our assurance programs
• the purpose of the RTP and information disclosed, see Reportable tax position schedule.

Report highlights

This is the sixth year of publishing this report. It includes high-level observations on trends over the 4 income years 2020–21 to 2023–24, where practicable.

Program segment analysis

We have included a breakdown of lodgment and disclosures by entities based on their program categorisation (for example, Top 1,000) over a 4 year period. A comparison of PCG question disclosures for 2023–24 across the populations shows that low-risk disclosures are significant and consistent with our compliance and assurance focus under our Top 100 and Top 1,000 programs.

Improving areas of risk

Consistent with our continued focus on engagement and assurance and providing guidance to the large market on risk, there was an increase in RTP disclosures in 2023–24. Overall, there was:

• an increase in low-risk arrangements
• a decrease or no change in the proportion of high-risk disclosures.

New Intangible Migration Arrangements questions

Two new Intangible migration questions were added in 2023–24.

There were 87 taxpayers that disclosed over 100 arrangements under question 44, with a majority of disclosures rated as lower risk (37%).

For question 45 there were 236 taxpayers that made 247 disclosures, 67% stated that there was no connection with migration of assets in a prior year.

The number of responses is consistent with our expectations for the first year of these questions based on feedback received during consultation on PCG 2024/1 Intangibles migration arrangements.

Increase in lodging population provides greater insight of key risks across large taxpayers

The number of disclosures has more than doubled and the number of schedules lodged has increased by 21% over the 4 years 2020–21 to 2023–24. This reflects the progressive expansion of the lodgment requirements over the period. Our Top 1,000 population is the largest lodging and disclosure population segment.

We continue to focus on ensuring ongoing compliance

Overall, the data from RTP schedule disclosures indicates high levels of voluntary compliance by the large corporates reporting population. Our data checks show that some lodgers do make errors when responding. We use these insights to improve our instructions and follow up compliance activities.

For more information on how we’re improving the system for those who want to comply, and taking firm action against those who choose not to, see Tax and Corporate Australia.

Category C of the RTP schedule

Questions in Category C of the RTP schedule are typically linked to ATO public advice and guidance (PAG) products, such as:

• taxpayer alerts (TAs)
• practical compliance guidelines (PCGs).

Together these products cover the key systemic risks in relation to large public and multinational businesses. As such, the aggregate data provides insights about the prevalence of key tax risks in the population.

There are generally no materiality thresholds on Category C questions. Taxpayers who meet the lodgment criteria must disclose arrangements, irrespective of the impact on their overall tax outcomes.

Questions

More than half of Category C questions in 2022–23 relate to arrangements described in taxpayer alerts. A third of the questions relate to PCGs and require taxpayers to self-assess the risk rating by applying the criteria in PCGs. The remaining questions relate to other risks.

Table 1: 2023–24 Category C questions and the related PAG product

Question number	PAG product
9, 14, 22–24, 39, 44 and 45	PCG
3, 10–13, 17, 25, 26, 33–36 and 41	Taxpayer alert
19, 21 and 42	Other

Notes:

• Questions 28, 29, 31, 40 and 43 have not been included as they relate to private company arrangements. All disclosures will be monitored; however, the risks are not part of the compliance program for public and multinational businesses.
• Questions that have been removed from the RTP schedule in 2024 or earlier years are not included.

Disclosures

Taxpayers are only required to provide a response to a question under Category C if they have an arrangement covered by the question. This means not every schedule lodged will contain a response to every Category C question. For example:

• some taxpayers will have no disclosures to make
• some taxpayers will only have one question related to an arrangement
• some taxpayers may have multiple arrangements to disclose, or a question may ask them to make multiple disclosures.

Care needs to be taken when making comparisons across multiple years as the population of public and multinational business taxpayers and their arrangements change year on year. Therefore, any comparison across years may not be a comparison of the same arrangements or taxpayers. The population has changed over the years as the schedule has expanded to take account of substituted accounting periods and private entities. Disclosures made by private entities have not been included in this report.

Note: Only questions included in the 2023–24 schedule have been included in the analysis. This report doesn't include questions from prior years that have been removed from the schedule or added in later years' schedules.

For more information, see How we use RTP disclosures.

RTP lodgments and disclosures

Over the past 4 years there has been an increase in lodgments, a high level of lodgment compliance and increase in disclosures due to:

• improvements in processes
• an increase in questions
• the expansion to the schedule made over the period.

There were over 2,000 lodgments made by public and multinational taxpayers, of which 1,455 made at least one disclosure against a Category C question in 2023–24. The number of lodgments increased by 21% over the 4 years from 2020–21 to 2023–24. These taxpayers reported 4,837 disclosures against Category C questions in 2023–24, which has more than doubled over the 4 year period to 2023–24.

Figure 1: RTP lodgments and disclosures, 2020–21 to 2023–24

You can also view data for RTP lodgments and disclosures by year in table format.

Notes:

• Nil RTP disclosures refer to taxpayers that have lodged an RTP schedule but do not have any arrangements to disclose.
• This graph only includes questions that are current for public and multinational businesses in 2023–24. Taxpayers may have made disclosures on questions that were current in prior years, but are not included for comparative purposes.

Disclosures by public advice and guidance product

Most Category C questions ask taxpayers to disclose whether they have arrangements covered by specific ATO public advice and guidance products, including taxpayer alerts and PCGs. The majority of disclosures relate to PCGs, which may apply to an entity irrespective of the risk level self-assessed by the entity.

Figure 2: Proportion of disclosures by public advice and guidance product, 2020–21 to 2023–24

You can also view data for the proportion of disclosures by type of public advice and guidance product in table format.

Lodgment and disclosures by program segment

RTP lodgments and disclosures at the program segment level provide high level patterns and trends in the population. Data from 2020–21 to 2023–24 was considered for the Top 100, Top 1,000, Large risk strategy and Medium and emerging risk strategy program segments.

Figure 3: Lodgment by program segment, 2020–21 to 2023–24

You can also view data for the lodgments by program segment in table format.

Figure 4: Disclosure by program segment, 2020–21 to 2023–24

You can also view data for disclosures by program segment in table format.

Population trends identified at the segment level include:

• The Top 1,000 is the largest population segment of lodgments and disclosures of the RTP schedule. This is expected given the demographics of this market. In 2023–24, the Top 1,000 made 55% of lodgments and 60% of disclosures.
• The Top 100 is the third largest population segment, with 11% of lodgments and 12% of disclosures in 2023–24. The proportion of Top 100 lodgments and disclosures remained relatively steady over the 4 year period to 2023–24.
• The Large risk strategy had the second largest number of lodgments with 496 or 24%. Large risk strategy also had the second highest number of disclosures, with 1,003 or 21% of disclosures in 2023–24.
• The Medium and emerging risk strategy population lodged 9% of RTP schedules in 2023–24 and made 7% of disclosures. This is expected due to the lodgment criteria of the RTP schedule.

Figure 5: Disclosure by program segment, for selected PCG questions for 2023–24

You can also view data for disclosures by program segment for selected PCG questions in table format.

Note:

• This chart includes disclosures for question 9 (offshore hub arrangements), question 14 (related party financing arrangements), question 22 (hybrid arrangements), question 23 (related party financing derivatives), question 24 (inbound distribution arrangements) and question 39 (hybrid arrangements).

The breakdown of risk ratings for PCG-related questions in 2023–24 (excluding new questions 44 and 45) shows the distribution of risk levels between the population segments. Medium and emerging risk strategy have the largest proportion of high-risk disclosures (12%) and the second smallest proportion of low-risk disclosures (61%).

Both the Top 100 (59%) and Top 1,000 (67%) segments have a significant proportion of disclosures assessed as low-risk. This is consistent with our focus on compliance and assurance to reduce high-risk and improve low-risk outcomes.

Disclosures by PCG related questions

The following RTP questions relate to PCGs. Table 2 and Figure 6 provide a high-level summary and the number of disclosures for each question.

Table 2: Category C, PCG-related disclosures, 2023–24

Question number	PCG topic
9	Offshore hubs
14 and 23	Related party financing arrangements
22	Hybrid arrangements
24	Inbound supply chains
37	Arm's length debt test
39	Imported hybrid mismatch rule
44 and 45	Intangible migration

Figure 6: Disclosures by PCG-related questions, 2020–21 to 2023–24

You can also view data for the disclosures by PCG-related questions in table format.

Disclosures by taxpayer alert related questions

The following RTP questions relate to taxpayer alerts. Table 3 and Figure 7 provide a high-level summary and the number of disclosures for each question.

Table 3: Category C, disclosures on arrangements subject to taxpayer alerts, 2023–24

Question number	Taxpayer alert topic
3	Bifurcated procurement hubs
11, 17 and 33	Related party finance
10	Thin capitalisation
12	Business fragmentation
13	Research and development
25	Payments connected with intangibles
26	Multiple entry consolidated groups
34	Interest withholdings tax
35	Multiple entry consolidated groups
36	Derivatives
41	Treaty shopping arrangements

Figure 7: Disclosures by taxpayer alert related questions, 2020–21 to 2023–24

You can also view data for disclosures by taxpayer alert related questions in table format.

Note: Questions 33, 36 and 43 are not included in the table as no responses were received. 

Disclosures on other questions

The following RTP questions relate to other areas of concern. Table 4 and Figure 8 provide a high-level summary and the number of disclosures for each question.

Table 4: Category C, Other questions, 2023–24

Question number	Topic
19	Settlements
21	Unamended mistakes or omissions
42	Global intangible low-taxed income

Figure 8: Disclosures on other questions, 2020–21 to 2023–24

You can also view data for the number and percentage of disclosures on other questions in table format.

PCG related disclosures

Self-assessing risks related to arrangements

PCG's provide a framework for corporate taxpayers and their boards to self-assess the risk associated with their arrangements and understand our likely compliance response. Self-assessment is voluntary, but we consider it best practice for corporate taxpayers to include self-assessment under PCGs as part of their standard tax governance processes.

If a taxpayer hasn’t undertaken the self-assessment, they must disclose a high-risk rating in the schedule or tell us they haven't applied the PCG. This alerts us to examine the arrangement more closely to obtain confidence about the tax outcome.

Taxpayers must disclose their self-assessed risk rating in the corresponding Category C question. In some cases, they may be required to disclose multiple arrangements. Therefore the greatest number of disclosures are against PCG linked questions.

Offshore hubs: question 9 disclosures

Overview of question 9

Practical Compliance Guideline PCG 2017/1 provides guidance on transfer pricing issues related to centralised operating models that involve procurement, marketing, sales, and distribution functions.

We are concerned with the:

• mispricing of services and functions relating to the sales and marketing of goods and commodities provided by international related parties
• risk of inappropriate structuring of marketing hubs.

We monitor offshore procurement hubs that supply 'indirect' or 'non-core' goods or services (non-core product) to an Australian entity.

Figure 9: Disclosures on question 9, 2023–24

You can also view data for the disclosures on question 9 in 2023–24 in table format.

Note:

• PCG 2017/1 asks taxpayers to make a disclosure for each hub arrangement they have in place.

Disclosures on marketing hubs

Figure 10: Comparison of risk zone disclosures on marketing hubs in question 9, 2020–21 to 2023–24

You can also view data for the comparison of risk zone disclosures on marketing hubs in question 9 in table format.

Marketing hubs findings

In 2023–24, 116 taxpayers disclosed 178 marketing hub arrangements. The number of marketing hub disclosures has increased 24% over the 4 years to 2023–24.

The top 3 commodities sold via offshore marketing hubs are iron ore, coal and liquified natural gas (LNG). Only a very small portion of all exports sold via offshore marketing hubs are for commodities not produced by the energy and resources sector.

There were 2 high-risk arrangements in 2023–24, both of which are either currently under review or audit under our compliance and assurance programs. Over the 4 years from 2020–21 to 2023–24, the number of high-risk disclosures halved and the proportion of high-risk disclosures decreased from 3% to 1%.

In 2023–24, 8 taxpayers self-assessed in the 'High risk – PCG not applied' category (who did not apply ATO risk methodology or calculate the tax impact), an increase of 3 from the prior year. The majority of these disclosures (7) have been reviewed as part of our compliance and assurance program.

In addition, 78% of total disclosures were rated as low-risk in 2023–24. The low-risk subcategory increased by 33 disclosures or 31% over the 4-year period to 2023–24.

The decrease in high-risk disclosures and the increase in low-risk disclosures indicates a positive behavioural shift for taxpayers undertaking these types of arrangements.

We continue to undertake a range of engagement activities in relation to the risk, including:

• engagement with industry bodies and other jurisdictions
• working through our compliance and assurance programs.

Information from other schedules, such as the International Dealings Schedule (IDS) and Country-By-Country (CBC) reporting, are also used to understand and identify the risk.

Disclosures on non-core procurement hubs

Figure 11: Comparison of risk zone disclosures on non-core procurement hubs in question 9, 2020–21 to 2023–24

You can also view data for the comparison of risk zone disclosures on non-core procurement hubs in question 9 in table format.

Procurement hubs findings

In 2023–24, 79 taxpayers disclosed 143 non-core procurement hub arrangements, an increase from 132 disclosures in the previous year. As taxpayers can procure from more than one offshore hub, they are required to report each hub arrangement.

There are 2 noted shifts in disclosures. Firstly, the number of low-risk disclosures increased by 12 (15%) over the last 4 years. Secondly, in line with the past 2 years, there have been minimal high-risk disclosures, indicating a continuation of the positive behavioural shift for taxpayers with these arrangements.

The large number of 'high risk – PCG not applied' disclosures in 2020–21 was due to one taxpayer, that is part of a Top 100 corporate group, disclosing over 50 arrangements. From 2021–22, the disclosures previously categorised as 'high risk – PCG not applied' have reported as white zone subcategory.

Related party finance: questions 14 and 23 disclosures

Overview of questions 14 and 23

Practical Compliance Guideline PCG 2017/4 allows taxpayers to self-assess the tax risk of their cross-border related party financing arrangements.

Schedule 1 sets out the risk assessment framework to determine the risk rating of cross-border related party debt. We expect the pricing of related party debt to align with the commercial incentive of achieving the lowest possible 'all in' cost to the borrower.

Schedule 2 is used to determine the risk rating of related party derivative arrangements.

Schedule 3 was introduced in 2020–21 and is related to outbound interest-free loans between related parties. It outlines the factors under which the risk score assigned to outbound interest-free loans made between related parties may be modified for the purposes of Schedule 1.

Given the prevalence and the significant tax outcomes involved, we actively investigate these arrangements. We continue to undertake assurance activities on arrangements disclosed in the red and amber zones by Top 100 and 1,000 taxpayers. We have strategies in place to address high-risk arrangements where the loan amounts are less significant, including where the disclosures come from taxpayers in the Medium and emerging risk strategy population segment.

The review of related party financing arrangements is an inherent element of the assurance work we undertake. This involves reviewing the application of PCG 2017/4 against the taxpayer’s relevant loan agreements and transfer pricing documentation.

Figure 12: Disclosures on questions 14 and 23, 2023–24

You can also view data from disclosures on questions 14 and 23 in table format.

Notes:

• 'Not disclosed' refers to disclosures by taxpayers who included the question number but didn’t include the subcategory number on their schedule.
• Schedule 3 was introduced in 2020–21 with its own separate risk zone sub-categories to distinguish outbound interest free loans as outlined under Schedule 3 of PCG 2017/4.

In 2020–21, an additional category for question 14 was added where Schedule 1 and 3 of PCG 2017/4 were not applied; these are included under the 'PCG not applied' category. Where a taxpayer does not apply the PCG we treat this as high-risk as it requires us to review the arrangements to establish the existence or otherwise of risk.

Findings from question 14

Disclosures on related party financing

Figure 13: Comparison of risk zone disclosures on related party financing arm's length conditions in question 14, 2020–21 to 2023–24

You can also view data on risk zone disclosures on related party financing arm's length conditions in question 14 in table format.

Notes:

• 'Not disclosed' refers to disclosures by taxpayers who included the question number but didn’t include the subcategory number on their schedule.
• Schedule 1 risk zone sub-categories have been combined with Schedule 3 to provide a complete picture of disclosures made and historical comparison.

The number of disclosures increased by 57% over the 4 years to 2023–24, largely due to the change in reporting requirements and a 19% increase in the number of taxpayers making disclosures. Question 14 receives the highest number of disclosures, with 2,369 disclosures made in 2023–24, an increase of 8% from the previous year.

Over the 4 years from 2020–21 to 2023–24, the spread of risk ratings has remained relatively stable, however, there has been a 57% increase in the number of disclosures made.

The proportion of high-risk disclosures have remained relatively stable, at around 10%, over the 4 years from 2020–21 to 2023–24. Of the 163 taxpayers making a high-risk disclosure, 64% have had or are currently undergoing compliance activity. The 64% of taxpayers account for 85% of the total 2022–23 inbound loan quantum reported by all taxpayers who disclosed a high-risk arrangement. We profile all high-risk disclosures, irrespective of their materiality, to determine whether further investigation is required.

The information from question 14 is analysed with other information, such as CBC and IDS, to better understand the risk.

Findings from question 23

Disclosures on related party financing derivatives

Figure 14: comparison of risk zone disclosures on related party financing derivatives in question 23, 2020–21 to 2023–24

You can also view data on risk zone disclosures on related party financing derivatives in question 23 in table format.

Note: 'Not disclosed' refers to disclosures by taxpayers who included the question number but didn’t include the subcategory number on their schedule.

There were 86 disclosures made for question 23 in 2023–24, a decrease of 8 from the previous year. There were 9 high-risk disclosures made in 2023–24, an increase from 5 made the previous year. All high-risk disclosures have either been reviewed, are under review as part of our compliance and assurance program or have been discussed with us. More than 68% of disclosures made under question 23 have had or are currently undergoing compliance activity.

The proportion of high-risk arrangements declined over the 3 years from 2020–21 (13%) to 2022–23 (5%) then increased in 2023–24 (to 10%). Similarly, the proportion of low-risk arrangements increased over the 3 years from 2020–21 (62%) to 2022–23 (81%) then decreased in 2023–24 (to 65%).

Hybrid arrangements: question 22 and question 39

Question 22

The hybrid mismatch rules are intended to deter the use of hybrid mismatch arrangements that result in double non-taxation outcomes by exploiting differences in the tax treatment of an entity or financial instrument under the income tax laws of 2 or more countries.

Question 22 relates to Practical Compliance Guideline PCG 2018/7, which has been designed to assist taxpayers to restructure into compliant replacement arrangements. These arrangements eliminate double non-taxation outcomes, consistent with the underlying objective of the hybrid mismatch rules.

We use data available from schedule disclosures and other information sources, such as question 49 on the IDS, to identify and monitor hybrid restructures undertaken and arrangements maintained by taxpayers. Our focus is on ensuring compliance with the hybrid mismatch rules through ongoing engagement.

Table 5: Disclosures on question 22, 2020–21 to 2023–24

Disclosure year	Low risk	Not low risk	Not disclosed	Total
2020–21	16	0	0	16
2021–22	9	1	4	14
2022–23	6	0	2	8
2023–24	8	0	5	13

Figure 15: Comparison of risk zone disclosures on hybrid arrangements in question 22, 2020–21 to 2023–24

You can also view data on risk zone disclosures on hybrid arrangements in question 22 in table format.

Findings from question 22

There were 13 disclosures for question 22 in 2023–24, a 63% increase from 2022–23. The increase in the number of disclosures received appears to be largely driven by erroneous disclosures made by one Division 832 Control group. Instances of inaccurate reporting are followed up as part of our compliance and assurance programs.

There were 5 disclosures made without a subcategory provided. We use data from other information sources, including question 49 on the IDS, to gain a better understanding of the restructure being disclosed. If required, these disclosures will be queried as part of our compliance and assurance program.

There were 8 disclosures that self-assessed as low-risk, which is an increase of 2 from the prior year. We verify these self-assessments when we engage with these taxpayers through our compliance and assurance programs. There were no disclosures made for 'not low risk' under question 22.

Question 39

This is the third year of reporting under question 39, which was added to the RTP instructions in 2021–22. This question requires taxpayers to disclose self-assessed risk ratings using Practical Compliance Guideline PCG 2021/5.

PCG 2021/5 contains practical guidance as to the ATO’s assessment of the relative levels of tax compliance risk associated with imported hybrid mismatches addressed by Subdivision 832-H of the Income Tax Assessment Act 1997. It sets out the Commissioner’s approach to reviewing whether a taxpayer has undertaken reasonable enquiries in relation to the imported hybrid mismatch rule for non-structured arrangements.

Figure 16: Comparison of risk zone disclosures on hybrid arrangements in question 39, 2021–22 to 2023–24

You can also view data on risk zone disclosures on hybrid arrangements in question 39 in table format.

Findings from question 39

There were 1,211 disclosures made in 2023–24, a 6% increase from 2022–23. PCG 2021/5 is relevant to any Australian taxpayer that seeks a deduction for a cross-border payment made to a member of its Division 832 control group. Therefore, we expect a large number of disclosures for this question.

The number of 'high-risk – PCG not applied' disclosures significantly reduced in 2022–23. This was expected as PCG 2021/5 was released on 16 December 2021, part way through the 2021–22 income year. As a result, almost 20% of taxpayers disclosed that they had insufficient time to self-assess against PCG 2021/5 in 2021–22. The increase in the number of taxpayers applying PCG 2021/5 in 2022–23 resulted in an increase in the number of disclosures across the remaining risk zones.

In 2023–24, 83% of disclosures were rated as low-risk and a further 14% of disclosures were rated as low-moderate risk or white zone. This indicates that more than 97% of taxpayers have applied PCG 2021/5 and followed our recommended approaches to demonstrate compliance with Subdivision 832-H.

There were 11 disclosures rated as very high-risk, which account for 1% of disclosures made in 2023–24. Of these, 4 have been reviewed as part of our compliance and assurance program, with 3 receiving low assurance and specific recommendations to improve the process implemented to demonstrate compliance with the imported hybrid mismatch rule. A further 2 disclosures are currently under review with the imported hybrid mismatch rule under consideration. We continue to monitor the remaining 5 very high-risk disclosures and may review these under our compliance and assurance programs at a later time.

In 2023–24, 11 disclosures were rated as PCG not applied, of which:

• 3 satisfy the green zone requirements
• one is currently under review as part of our compliance and assurance program
• 2 have been reviewed, with 1 receiving recommendations to improve processes to demonstrate compliance with the imported mismatch rule
• 5 may be reviewed as part of our compliance and assurance programs where appropriate.

A further 9 disclosures did not provide a self-assessed risk rating. We consider these disclosures to be high-risk. We continue to monitor these arrangements and may review them under our compliance and assurance programs at a later time.

The disclosures made under question 39 are used with other information sources, such as the IDS, to better assess risk with the imported hybrid mismatch rule.

Inbound distribution arrangements: question 24 disclosures

Overview of question 24

Practical Compliance Guideline PCG 2019/1 provides a framework for taxpayers to assess the transfer pricing risk of their inbound distribution arrangements. Our focus for PCG 2019/1 is on transfer pricing outcomes associated with the activities of inbound distributors, including the distribution of:

• goods purchased from related foreign entities for resale
• digital products or services where the intellectual property in those products or services is owned by related foreign entities.

We review the reasonableness of these disclosures as part of our Justified Trust program. Under this program we review the top 1,100 public groups and multinationals in Australia, including many inbound distributors. We use our data and analytics capabilities to assess the reasonableness of disclosures of distributors outside this population who are required to complete the RTP schedule. We employ a range of approaches to detect and address any incorrect disclosure or non-disclosure.

Figure 17: comparison of risk zone disclosures on inbound distribution arrangements in question 24, 2020–21 to 2023–24

You can also view data on risk zone disclosures on inbound distribution arrangements in question 24 in table format.

Notes:

• 'Not disclosed' refers to disclosures by taxpayers who included the question number but didn’t include a valid sub-category on their schedule.
• 'PCG not applied' refers to taxpayers who choose not to follow the PCG or taxpayers who fall within either of the following categories
  • entities that have adopted the distributor simplified transfer pricing record keeping option in PCG 2017/2
  • paragraph 49 of PCG 2019/1 where an entity has an inbound distribution arrangement but an EBIT margin is unable to be determined and the taxpayer has not applied PCG 2019/1.
• PCG 2019/1 doesn't provide for an equivalent white zone similar to other PCGs covered in this report.

Findings from question 24

There were 349 disclosures made at question 24 in 2023–24, an increase of 7% from the prior year. There has been an increasing trend in the number of question 24 disclosures made each year, with a 19% increase over the last 4 years since 2020–21. In particular, the

• number of low-risk disclosures increased by 41 (49%) over the 4-year period and 6 disclosures (5%) from 118 in the prior year
• number of high-risk disclosures increased by 4 disclosures (6%) over the 4-year period to 2023–24 and 9 disclosures (14%) from 63 in the prior year
• number of 'PCG not applied' disclosures decreased by 8 disclosures (20%) over the 4-year period to 2023–24. The majority of these disclosures related to an advance pricing arrangement (APA) or had a settlement agreement in place.

These findings indicate a positive shift in behaviour for disclosures regarding these arrangements. However, we do have some concerns that taxpayers may be mischaracterising themselves as distributors with a low-risk profit marker when in fact they are not. We are currently improving the guidance in this area, which may impact the risk profile of the population.

Most taxpayers who disclosed an inbound distribution arrangement:

• fall within our Top 100 or Top 1,000 populations
• are subject to review under our compliance and assurance programs or through the APA program.

In addition, we tailor engagement and increase awareness to improve compliance and ensure inbound supply chain obligations are met.

Intangible migration: question 44 and 45 disclosures

Overview of questions 44 and 45

Question 44 and 45,were introduced to the RTP schedule in 2023–24, in relation to Intangibles Migration Arrangements as set out in Practical Compliance Guideline PCG 2024/1. Our focus for PCG 2024/1 is:

• structuring issues and tax risks associated with cross-border arrangements between related parties involving the Migration of intangible assets
• the mischaracterisation and non-recognition of Australian activities connected with intangible assets held offshore.

The PCG sets out our compliance approach and provides a risk assessment framework in relation to the risks that are in scope of the PCG.

In question 44, taxpayers are asked to disclose the Migration of intangible assets entered into in the current income year and self-assess under the PCG.

Question 45 relates to current year non-Migration arrangements and their connection with a prior Migration of intangible assets in the last 5 years. RTP disclosures are reviewed as part of our Intangibles risk strategy.

Note: in 2023–24 RTP schedule instructions subcategory 7 was included for early balancing taxpayers with insufficient time to complete an assessment of the current Migration arrangements.

Findings from question 44

Figure 18: International related party Intangibles Migration Arrangements that involved a Migration of intangible assets in 2023–24

You can also view data on International related party Intangibles Migration Arrangements that involved a Migration of intangible assets in table format.

There were 87 taxpayers that disclosed 104 arrangements in the first year of reporting at question 44.

The majority of disclosures were rated as lower risk (37%) with a further 32% unable to be rated due to insufficient time. This was a transitional category and has been removed from the 2024–25 RTP schedule.

There were a number of disclosures rated as high-risk. We review these disclosures and, if necessary, escalate to our compliance and assurance program for further investigation.

We use data available from the schedule together with information from other sources, such as the IDS and the Local File, to understand and monitor these arrangements.

Findings from question 45

Figure 19: International related party Intangibles Migration Arrangements in the current year that did not involve a Migration of intangible assets in 2023–24

You can also view data on International related party Intangibles Migration Arrangements that did not involve a Migration of intangible assets in table format.

In the first year of reporting there were 236 taxpayers that made 247 disclosures at question 45. Note that this number of disclosures is reflective of the breadth of the types of arrangements described in the PCG 2024/1.

The majority of disclosures (67%) stated there were no intangible arrangements with a prior connection with prior migration. A further 14% had insufficient time to complete an assessment of the connection between the current arrangements and prior migration.

We use data available from the schedule together with information from other sources, such as the IDS and the Local File, to understand and monitor these arrangements. We will refer arrangements for further investigation as appropriate.

Disclosures on arrangements subject to taxpayer alerts and other questions

Taxpayer alerts and other questions

We issue taxpayer alerts to warn taxpayers of our concerns about new or emerging arrangements that we consider might pose a high-risk, such as tax avoidance arrangements. Our aim is to share our concerns early to help taxpayers make informed decisions about their tax affairs. This also limits the proliferation of the arrangements in the market.

Our experience shows most large corporate taxpayers don’t wilfully take on tax risk. Taxpayers will often engage with us to gain certainty on arrangements we’ve indicated we have concerns with. They may apply for a ruling or APA or simply not enter into these arrangements, preventing proliferation.

You can find out more about taxpayer alerts.

Related party finance: questions 11, 17 and 33

Table 6: Disclosures on questions related to financing arrangements, 2021–22 to 2023–24

Question	Topic	Taxpayer alert	2021–22	2022–23	2023–24
11	Financing – round robin arrangements	TA 2016/10	4	4	3
17	Financing – WHT	TA 2018/4	10	9	11
33	Mischaracterisation arrangements connected with foreign investment	TA 2020/2	0	0	0

Risks associated with related party financing arrangements continue to be a key focus for us. We use the disclosures under questions 11, 17 and 33, together with data from the IDS and CBC reports, to identify and assess these risks.

Question 11

This question addresses Taxpayer alert TA 2016/10 Cross-border round robin financing arrangements.

The concern with these arrangements is that they involve funding of an overseas entity or operations by an Australian entity, where the funds are subsequently provided back to the Australian entity, or its Australian associate, in a manner which purportedly generates Australian tax deductions while not generating corresponding Australian assessable income.

Findings from question 11

There were 3 disclosures at question 11 in 2023–24 (a decrease from 4 in 2022–23), all of which have been reported in prior years. The lack of new entrants shows a positive shift in taxpayer behaviour. Of these arrangements, 2 have been reviewed as part of our compliance and assurance programs. The remaining disclosures has been reviewed.

Question 17

Question 17 relates to Taxpayer alert TA 2018/4 concerning cross-border arrangements where income tax deductions are claimed in Australia on an accrual basis but withholding tax is not paid when deductions are claimed. We are concerned with:

• tax-driven structuring
• claiming a deduction where a payment is not expected to take place
• tax issues that arise from how the transaction is affected.

Findings from question 17

There were 11 disclosures made at question 17 in 2023–24, an increase from 9 in 2022–23. All disclosures have been reviewed or will be reviewed as part of our compliance and assurance programs.

Question 33

Question 33 was added to the schedule in 2020–21 and relates to mischaracterised arrangements and schemes connected with foreign investment into Australian entities as outlined in TA 2020/2. TA 2020/2 is concerned with cross-border arrangements that mischaracterise the structure used by foreign investors to invest directly into Australian businesses.

Findings from question 33

There were no disclosures made for question 33. The risk remains part of our compliance and assurance program.

Business fragmentation: question 12

Question 12 relates to arrangements involving the fragmentation of integrated trading businesses in order to re-characterise trading income to passive income to achieve a more favourable tax outcome, as described in Taxpayer alert TA 2017/1. Our concerns arise where an arrangement fragments integrated trading businesses to re-characterise trading income into more favourable passive income.

We combine the information obtained from disclosures at question 12 with data from transitional election forms to risk assess stapled groups. Those eligible taxpayers that have lodged a valid transitional election form may be entitled to claim transitional relief and continue to apply the lower 15% withholding rate during the transition period.

Findings from question 12

Table 7: Disclosures on questions related to business fragmentation, 2021–22 to 2023–24

Question	2021–22	2022–23	2023–24
Question 12	5	4	3

There were 3 disclosures at question 12 in 2023–24. All of the disclosures have been reported in prior years and either have been subject to a review or are currently under review as part of our compliance and assurance program.

R&D: question 13

Taxpayer alerts for the Research and development (R&D) tax incentive relate to claims for ineligible activities and expenditure, including R&D tax incentive claims for ordinary business activities. Specific concerns are also identified within the following industry sectors:

• Taxpayer alert TA 2017/2 (construction activities)
• Taxpayer alert TA 2017/3 (any business activities)
• Taxpayer alert TA 2017/4 (agricultural activities)
• Taxpayer alert TA 2017/5 (software development activities).

Findings from question 13

Table 8: Disclosures on questions related to R&D, 2021–22 to 2023–24

Question	2021–22	2022–23	2023–24
Question 13 TA 2017/2	0	0	0
Question 13 TA 2017/3	3	3	4
Question 13 TA 2017/4	1	1	1
Question 13 TA 2017/5	4	5	3
More than one taxpayer alert	3	5	4
Total	11	14	12

There were 12 disclosures at question 13 in 2023–24, a slight decrease of 2 from the previous year.

The majority of disclosures for question 13 relate to TA 2017/3 (4 disclosures) and TA 2017/5 (3 disclosures). A further 4 disclosures relate to multiple taxpayer alerts and one relates to TA 2017/4. Where appropriate, we refer concerns identified with eligibility of R&D activities to AusIndustry, who are responsible for this aspect of the R&D tax incentive.

Material changes to settlement positions: question 19

Question 19 relates to breaches or material changes to facts covered by settlement deeds and future compliance arrangements. It is an important feature of our settlements that we achieve behavioural change and secure future tax outcomes.

Findings from question 19

Table 10: Disclosures on questions related to settlement deeds and future compliance arrangements, 2021–22 to 2023–24

Question	2021–22	2022–23	2023–24
Subcategory 1: breached one or more of the terms of the settlement deed or future compliance arrangement	4	1	1
Subcategory 2: changes in the relevant and material facts, as disclosed in the deed or arrangement, have occurred	1	2	7
Subcategory 3: compliant with the terms of settlement deed or future compliance agreement	n/a	n/a	29
Total	5	3	37

The number of disclosures increased from 3 disclosures in 2022–23 to 37 in 2023–24, due to the addition of subcategory 3 to question 19 in 2023–24. This requires taxpayers to disclose that they are compliant with their settlement deed or future compliance agreement, rather than just focus on instances of non-compliance.

The increase in the number of taxpayers disclosing material changes indicates taxpayers are aware of the requirement to comply with their respective settlement deeds or future compliance arrangement by notifying us of potentially becoming non-compliant. Disclosures made under subcategory 1 and 2 are closely reviewed.

We continue to monitor and engage with taxpayers to confirm compliance with the terms of their respective settlement deeds or future compliance arrangements where required.

Payments connected with intangibles: question 25

Question 25 relates to deductions for expenses incurred under an arrangement with offshore parties using intangible assets held by an offshore party, as described in Taxpayer alert TA 2018/2. Question 25 was added to the RTP schedule in the 2019–20 income year to inform whether intangible assets have been appropriately recognised and Australian royalty obligations have been met.

Findings from question 25

Table 9: Disclosures on questions related to intangibles as part of question 25, 2021–22 to 2023–24

Question	2021–22	2022–23	2023–24
Question 25	18	17	15

There were 15 disclosures at question 25 in 2023–24. Of these:

• 11 disclosures indicated the taxpayer had considered the arm’s length principle in determining the appropriate consideration for the use of the intangible assets, but the arrangement wasn't covered by section 284–255 (Taxation Administration Act 1953) compliant transfer pricing documentation. Most of these taxpayers have disclosed at question 25 in prior years.
• 2 disclosures indicated that the taxpayer hasn't applied the arms' length principle in determining the appropriate consideration for the use of intangible assets
• one disclosure did not appropriately recognise an amount as consideration for the use of the intangible
• one disclosure did not disclose the subcategory.

We use other information from other sources, such as the IDS, to understand these disclosures. Where appropriate, these will be reviewed through compliance and assurance programs.

We will continue to monitor and take action in relation to arrangements described under TA 2018/2 as part of our compliance and assurance programs.

All other taxpayer alert and other questions

The following questions relate to taxpayer alerts that involve either nil disclosure or a small number of disclosures that don't fit within an earlier grouping. Accordingly, we have provided the information in a single table form.

Other information such as CBC and IDS are also used to understand and support disclosures.

Table 10: Disclosures on all other taxpayer alert questions, 2021–22 to 2023–24

Question	Topic	Taxpayer alert	2021–22	2022–23	2023–24
3	Bifurcated procurement hubs	TA 2015/5	5	4	3
10	Thin capitalisation	TA 2016/9 and TD 2020/2	4	4	4
21	Unamended mistakes or omissions made in the income tax return	Other	37	28	34
26	MEC group and CGT assets	TA 2019/1	2	1	1
34	Interposed entities to avoid withholding tax	TA 2020/3	0	1	0
35	MEC groups	TA 2020/4	6	6	6
36	Derivative instruments	TA 2020/5	0	0	0
41	Treaty shopping	TA 2022/2	n/a	1	1
42	Treatment of global intangible low-taxed income as subject to foreign income tax in the US for the purpose of the hybrid mismatch rules in Division 832 of the ITAA 1997. Outlined in TD 2022/9.	Other	n/a	7	7