Section C: Category C reportable tax positions – CIVs

What to disclose in Section C

In Section C you need to disclose Category C reportable tax positions (RTPs). You must complete all the mandatory fields for each RTP you're reporting.

The questions will tell you if you need to consider materiality. When the question doesn't include any materiality criteria, you must disclose a Category C RTP if the arrangement, transaction or circumstances it covers is relevant for your entity.

Unless we specify otherwise, the questions refer to arrangements or transactions that:

• are in place at any time in the income year
• your tax return and the accompanying schedule covers.

You don't need to disclose an arrangement for a Category C question referencing a taxpayer alert if:

• we review the arrangement and advise we won't be taking further action
• there has been no material change to the arrangement since our review.

Did you have any Category C RTPs for the 2025–26 income year?

You must confirm if your entity has any Category C disclosures.

Select from the drop-down menu, either Yes or No.

If you select No, go to Section D: Declaration and signature.

If you select Yes, the next question will ask How many Category C RTPs you are reporting?

How many Category C RTPs are you reporting?

Write the total number of Category C RTPs you are reporting.

You need to follow the instructions for answering individual Category C questions to ensure you make a complete disclosure.

Using the PDF schedule

In the PDF version, once you enter the number of RTPs you are disclosing and move off the field, it will automatically display the required number of fields to make the disclosures.

Have you discussed this position with the ATO?

For each disclosure you make, you must confirm if you (or another representative of your entity) have previously discussed the disclosure with us. You must complete all fields for each disclosure, no matter what answer you provide.

Select from the drop-down menu, either Yes or No.

RTP Category C question and subcategory

Write the number of the Category C question you are disclosing in the RTP Category C question field. If there are subcategories, enter the relevant subcategory in the RTP Category C subcategory field.

If your entity has multiple positions covered by a single question, the question will tell you how to disclose this. You may need to select the appropriate subcategory or make a disclosure for each position.

For all Category C questions, you must make a disclosure if your entity had an arrangement covered by a question at any time during the year. If the arrangement is no longer in place at the time of preparing your entity's tax return, note this in the Comments field.

Comments

Some questions specify the information you must provide in this field.

If a question doesn't require information in the Comments field, we encourage you to explain your entity's arrangements. Doing so may mean we:

• don't need to contact you for more information
• can target the questions we ask if we do require more information.

Question 1

Is your entity currently involved in cross-border, round robin financing arrangements using an arrangement, or variation of an arrangement, as described in Taxpayer Alert TA 2016/10 Cross-Border Round Robin Financing Arrangements?

Question 2

Was your entity party to an arrangement separating an integrated trading business into parts that results in trading income being re-characterised into more favourably taxed passive income?

For more guidance, see Taxpayer Alert TA 2017/1 Re-characterisation of income from trading businesses.

Question 3

Has your entity claimed the R&D tax incentive using an arrangement, or variation of an arrangement, as per the descriptions in the subcategories below?

• Subcategory 1: Taxpayer Alert TA 2017/2 Claiming the Research and Development Tax Incentive for construction activities
• Subcategory 2: Taxpayer Alert TA 2017/3 Claiming the Research and Development Tax Incentive for ordinary business activities
• Subcategory 3: Taxpayer Alert TA 2017/4 Claiming the Research and Development Tax Incentive for agricultural activities
• Subcategory 4: Taxpayer Alert TA 2017/5 Claiming the Research and Development Tax Incentive for software development activities
• Subcategory 5: More than one of the Taxpayer Alert subcategories applies.

Write the relevant subcategory number in the RTP Category C subcategory field.

If more than one Taxpayer Alert subcategory applies, write the relevant Taxpayer Alert references in the Comments field.

Question 4

If your entity has cross-border related party finance arrangements, disclose the outcome you have self-assessed using PCG 2017/4 ATO compliance approach to taxation issues associated with cross-border related party financing arrangements and related transactions. Use Schedule 1 and/or Schedule 3 for the 3 most material arrangements.

If your entity has a cross-border related party finance arrangement with a higher risk rating to the 3 already disclosed, you must also disclose this arrangement.

Include each arrangement as a separate disclosure on the RTP schedule.

Materiality is determined by the loan amount in Australian dollar equivalent. Use the instructions for question 11 of the International dealings schedule 2026 (IDS) to determine materiality.

Enter the relevant subcategory number in the RTP Category C subcategory field:

• For related party debt funding arrangements (inbound interest-bearing, outbound interest-bearing and inbound interest-free loans) rated under Schedule 1:
  • Subcategory 1: white zone
  • Subcategory 2: green zone
  • Subcategory 3: blue zone
  • Subcategory 4: yellow zone
  • Subcategory 5: amber zone
  • Subcategory 6: red zone
  • Subcategory 7: red zone, if you haven't applied Schedule 1.
• For related party outbound interest-free loans under Schedule 3:
  • Subcategory 11: white zone
  • Subcategory 12: green zone
  • Subcategory 13: blue zone
  • Subcategory 14: yellow zone
  • Subcategory 15: amber zone
  • Subcategory 16: red zone
  • Subcategory 17: red zone, if you haven't applied Schedule 3.

For each of the arrangements you disclose, provide all the information below in the Comment field:

• the currency of the loan
• the rate of interest (if variable, the base rate and margin)
• the Australian dollar equivalent loan amount
• if the arrangement is an outbound or inbound loan
• if the arrangement has been subject to any review by us, provide our reference number. This can be found in the top right corner of correspondence from us relating to the review. If you have discussed the arrangement with us outside a formal review product, provide details of the discussion.

Question 5

At any stage during the income year, did your entity have cross-border financing arrangements with an international related party (including back-to-back arrangements through third parties) where both the following occurred:

• it claimed a tax deduction for interest, an amount in the nature of interest, or any other loss it made on a financial arrangement under Division 230
• interest withholding tax wasn't remitted because a withholding tax liability isn't expected to arise within the next 18 months.

For more guidance, see Taxpayer Alert TA 2018/4 Accrual deductions and deferral or avoidance of withholding tax.

Question 6

If your entity has reached a formal settlement agreement or future compliance arrangement with us that applies to the current income year, disclose the outcome of your entity's terms of agreement using the following subcategories:

• Subcategory 1: your entity breached one or more of the terms of the settlement deed or future compliance arrangement.
• Subcategory 2: changes in the relevant and material facts, as disclosed in the deed or arrangement, have occurred.
• Subcategory 3: your entity is compliant with the terms of settlement deed or future compliance agreement.

Write the relevant subcategory number in the RTP Category C subcategory field. Write the number 1 if both Subcategory 1 and 2 apply.

In the Comments field, provide:

• details of the circumstances relevant to the subcategory
• our reference number for the settlement agreement or forward compliance arrangement. This can be found in the top right corner of correspondence from us related to the settlement or agreement.

Question 7

Are you aware of any unamended mistakes or omissions in any single tax return lodged by your entity within 4 years of the lodgment date of this RTP schedule where, if you were to amend all mistakes or omissions in that tax return, it would result in either:

• more than $1.5 million in tax being payable (or would have been payable had it not been offset, for example by losses from prior income years)
• more than $5 million in losses (including capital losses).

For the purposes of this calculation, only count mistakes and omissions your entity has not previously notified us of.

In the Comments field, provide details of the:

• mistakes or omissions
• tax returns the mistakes or omissions applies to
• nature of the mistakes or omissions
• amount of tax payable or losses the mistakes or omissions would result in.

Question 8

If your entity has restructured out of any arrangements in the current year to which the hybrid mismatch rules applied, or would have applied had the arrangements remained in place, disclose the subcategory that describes your entity's current position:

• Subcategory 1: all restructured arrangements qualify as low risk under Practical Compliance Guideline PCG 2018/7 Part IVA of the Income Tax Assessment Act 1936 and restructures of hybrid mismatch arrangements
• Subcategory 2: one or more of the restructured arrangements don't qualify as low risk under PCG 2018/7.

In considering whether the hybrid mismatch rules would apply you must disregard dual inclusion income.

Write the relevant subcategory number in the RTP Category C subcategory field.

For arrangements that aren't low risk, in the Comment field provide:

• details of the restructured arrangement
• the basis on which the arrangement didn't qualify as low risk under PCG 2018/7.

If you have disclosed the details of the restructured arrangement as part of your disclosure for the income year in the restructures section of your local file short form 2026 or IDS question 49 lodgment, you may refer us to that disclosure in your comments. You are still required to provide the basis on which the arrangement didn’t qualify as low risk under PCG 2018/7.

If you're not lodging your local file short form 2026 together with the lodgment of your tax return 2026, you must disclose the information we require in the RTP schedule about the arrangement.

Question 9

If your entity has related party derivative arrangements, disclose the outcome you have self-assessed using Schedule 2 of PCG 2017/4 for the 3 most material arrangements.

If your entity has a related party derivative arrangement with a higher risk rating than the 3 already disclosed, you must also disclose this arrangement.

Include each arrangement as a separate disclosure on the RTP schedule.

Determine materiality by the hedged item amount in Australian dollar equivalent.

Write the relevant subcategory number in the RTP Category C subcategory field:

• Subcategory 1: white zone
• Subcategory 2: green zone
• Subcategory 3: blue zone
• Subcategory 4: yellow zone
• Subcategory 5: amber zone
• Subcategory 6: red zone
• Subcategory 7: red zone, if you haven't applied Schedule 2.

In the Comment field for each red and amber arrangement you disclose, provide the:

• underlying transaction hedged by the derivative, including the loan quantum in Australian dollar equivalent
• commercial and operational reasons for borrowing in a foreign currency
• name and location of the counterparty for the derivative and hedged item.

In the Comments field for all other arrangements, if the arrangement has been reviewed by us, provide our reference number. This can be found in the top right corner of correspondence received from us relating to the review. If you have discussed the arrangement with us outside a formal review product, provide details of the discussion.

Question 10

Has your entity made a payment under a structured arrangement covered by item 1 of the table in subsection 832-615(2) of the Income Tax Assessment Act 1997?

Refer to LCR 2019/3 and PCG 2019/6 for more guidance.

In the Comments field, provide a description of the arrangement including the:

• name and place of incorporation or formation of the offshore deducting entity
• type of offshore hybrid arrangement and details of tax treatment of the parties to the arrangement in the relevant jurisdictions. For example, in the case of a reverse hybrid, provide the tax treatment for the offshore deducting entity, the reverse hybrid and any investing taxpayers.
• amount of the offshore hybrid mismatch and the amount of deductions disallowed under section 832-610 for the structured arrangement.

Question 11

Has your entity been part of an arrangement with the description of either:

• Subcategory 1: Your entity has subscribed for a controlling share of units in a unit trust in which they did not own a controlling share in the prior year. The unit trust had a debt to another party that was the trust’s associate before the subscription and the proceeds of the subscription were used to repay the debt.
• Subcategory 2: Your entity has or had an associate unit trust which, in the current or 4 previous income years, transferred assets into a second unit trust, relying on CGT rollover relief under Subdivision 126–G of Income Tax Assessment Act 1997 (ITAA 1997). The unit holdings in the second trust have subsequently changed to the extent that it is no longer your associate.

For more guidance, see Taxpayer Alert TA 2019/2Trusts avoiding CGT by exploiting restructure rollover.

Write the relevant subcategory number in the RTP Category C subcategory field.

Write the number 2 if both subcategories apply.

Question 12

In the current, or 4 prior income years, has your entity, or an entity that your entity controls, claimed a full credit or offset for foreign income tax paid, where less than 100% of the related foreign income (including capital gains) is included in their Australian assessable income?

For more guidance, see, ATO Interpretative Decision ATO ID 2010/175 Foreign income tax offset: entitlement where foreign capital gain is only partly assessable in Australia.

Question 13

Has your entity entered into any arrangements or schemes, or variation of arrangements, where the structure used by foreign investors to invest into an Australian business:

• has features inconsistent with vanilla debt or equity investments
• provides the foreign investor with any exposure to the economic return from all or part of a particular business or assets exploited in the business
• is otherwise as described in Taxpayer Alert TA 2020/2 Mischaracterised arrangements and schemes connected with foreign investment into Australian entities.

In the Comments field, provide:

• the foreign investor's identity
• a brief description of what features, if any, aren't consistent with vanilla debt or equity investments
• a brief explanation of how the investment provides the foreign investor with any exposure to the economic return from all or part of a particular business or assets exploited in the business.

Question 14

Has your entity entered into any arrangements, or variation of arrangements, with a non-resident related party and claimed a deduction for interest expenses under that arrangement where any of the following apply:

• An Australian resident flow-through trust has one or more non-resident investors.
• The non-resident investor holds its interest in the resident trust through an interposed offshore entity.
• The resident trust derives Australian-sourced income and makes distributions to the interposed beneficiary.
• The interposed beneficiary deducts interest expenses against the Australian income it receives from the trust.

See Taxpayer Alert TA 2020/3 Arrangements involving interposed offshore entities to avoid interest withholding tax.

Question 15

Has your entity entered into any arrangements, or variation of arrangements, described in Taxpayer Alert TA 2020/5 Structured arrangements that provide imputation benefits on shares acquired where economic exposure is offset through use of derivative instruments, and obtained imputation benefits relating to a parcel of Australian shares it holds (either directly or indirectly) where it has offset its economic exposure to those shares (or an Australian equities index) through the use of derivative instruments?

Question 16

Has your entity made payments to an entity that is a member of your entity's Division 832 control groups where those payments would, prior to the application of Subdivision 832-H, result in an income tax deduction in the current income year?

Disclose the outcome you have self-assessed using Practical Compliance Guideline PCG 2021/5 Imported hybrid mismatch rule – ATO's compliance approach.

Write the relevant subcategory number in the RTP Category C subcategory field:

• Subcategory 1: white zone
• Subcategory 2: green zone
• Subcategory 3: blue zone
• Subcategory 4: yellow zone
• Subcategory 5: amber zone
• Subcategory 6: red zone 1
• Subcategory 7: red zone 2
• Subcategory 8: red zone, if you haven't applied PCG 2021/5.

In the Comments field, where:

• the arrangement rating is red or amber, provide the reason the arrangement falls in that zone
• subcategory 8 applies, provide the reason you didn't apply the PCG.

Question 17

Has your entity entered into any arrangement with a related overseas entity, as described in Taxpayer Alert TA 2021/2 Disguising undeclared foreign income as gifts or loans from related overseas entities, involving the inflow of funds to Australia as a gift or an advance of funds by way of a loan? If the advance of funds was by way of a loan, disclose the arrangement only where one or more of the following applies:

• there has been no repayment of the loan
• the repayments made were less than the interest incurred
• the loan has been refinanced to the same related overseas entity or an associate.

Question 18

During the year, did your entity enter into, or was otherwise involved in, any new cross-border arrangements or structural changes involving intangibles or shareholding interests?

If the answer is yes, include in the Comments field:

• a brief description of the new arrangement or structural change and the jurisdiction of the counter-party entity or entities involved before and after the arrangement or structural change was implemented
• if you obtained, or expect to obtain, a reduced withholding tax under one of Australia’s double tax agreements on any royalties or unfranked dividends paid pursuant to this new arrangement or structural change?

For more guidance, see Taxpayer Alert TA 2022/2 Treaty shopping arrangements to obtain reduced withholding tax rates.

Question 19

If your entity restructured or replaced an arrangement during the current or prior income year which has satisfied the conditions in subsection 820-423A(2) or (5) of the ITAA 1997 and the arrangement was still in place, disclose separately for each of the restructure(s) the risk rating you have self-assessed under Table 1 of the Risk Assessment Framework in Practical Compliance Guidance PCG 2025/2 Restructures and the thin capitalisation and debt deduction creation rules – ATO compliance approach.

In the Comments section, provide the following information separately for each of the restructure(s):

• Identify and disclose the examples (if any) in Schedule 2 of PCG 2025/2 you relied upon in making your self-assessment of your risk rating for the restructure.
• Provide a description of the restructure. In providing this description you can refer to and incorporate by reference the description of the restructure that you provided in the International Dealings Schedule or that you have provided in the restructures section of your local file short form 2026 lodgment. You're still required to identify and disclose the PCG 2025/2 examples you relied on.

If you haven't lodged your local file short form 2026 together with the lodgment of your tax return 2026, you must disclose the information we require in the RTP schedule about the arrangement.

Write the relevant subcategory number in the RTP Category C subcategory field:

• Subcategory 1: White zone
• Subcategory 2: Yellow zone
• Subcategory 3: Green zone
• Subcategory 4: Red zone.

Question 20

If you have relied on one or more targeted compliance approaches in Schedule 3 of Practice Compliance Guideline PCG 2025/2 Restructures and the thin capitalisation and debt deduction creation rules – ATO compliance approach, select the relevant compliance approach(es) below:

• Subcategory 1: Paragraph 820-427A(3)(c) – Restructuring to remove recourse for payment of a debt to assets that aren't Australian assets (examples 29-31)
• Subcategory 2: Paragraph 820-427A(3)(c) – Minor or insignificant assets (examples 32-33)
• Subcategory 3: Paragraph 820-427(3)(d) – Annual trust distributions (example 34)
• Subcategory 4: Paragraph 820-427C(1)(d) – Restructuring in response to the conduit financing conditions (examples 35-37).

In the Comments section, provide a description of the restructure. In providing this description you can refer to and incorporate by reference the description of the restructure that you've provided in the restructures section of your local file short form lodgment.

Continue to: Section D: Declaration and signature – CIVs

Return to: Section B: Category A and B reportable tax positions – CIVs