Reminder: Country-by-Country reporting deadline is coming

Kate Morhi — Tue, 25 Jan 2022 05:28:00 +0000

Deadline is 4 February 2022 (in lieu of 31 December 2021). Failure to lodge can lead to Country-by-Country reporting entities being penalised up to $555,000 (per file).

Who is affected?

Country-by-Country reporting entity (CbCRE) with a 12-month income year ended 31 December 2020
CbCRE with a replacement reporting period ended 31 December 2020.

Why is this important?

Country-by-Country (CbC) reporting was introduced under Action 13 of the OECD Base Erosion and Profit Shifting (BEPS) initiative.

It is a tool to enhance transparency for tax administrations, and is part of a suite of international measures aimed at combating tax avoidance. To date, approximately 100 jurisdictions have introduced CbC reporting legislation, including Australia.

What is a CbCRE?

An entity (individuals excluded) is a CbCRE if it is:

A CbC reporting parent, or
A member of a CbC reporting group that includes a CbC reporting parent.

A ‘CbC reporting parent’ is an entity that is a member of a CbC reporting group that is not controlled by another entity in that group according to commercially accepted accounting principles, and the annual global income of that entity is A$1 billion or more.

A ‘CbC reporting group’ is either:

A group that is consolidated for accounting purposes as a single group, or
A notional listed company group – a group of entities that would be required to be consolidated as a single group for accounting purposes had the CbC reporting parent been a listed company.

When a CbCRE is subject to CbC reporting?

Broadly, if a relevant entity is a CbCRE during the preceding year, and continues to be an Australian tax resident during the current year, the relevant entity is required to lodge CbC reporting statements to the ATO within 12 months after the end of the current reporting period.

What statements need to be lodged?

CbC reporting statements	Australian CbC reporting parent	Australian CbC reporting non-parent	Approved format for lodgement
Local file	Prepare and lodge	Prepare and lodge	XML schema (*)
Master file	Prepare and lodge	Obtain a copy from group parent and lodge	Attachment to file (in English only)
CbC report	Prepare and lodge (unless lodging through a surrogate entity)	Notification only (if there is activated exchange between Australia and the jurisdiction in which the CbC report is lodged), otherwise lodge	XML schema (*)