Country-by-Country Reporting – ATO guidance on applications for exemption

Introduction

CbC reporting is required by Div 815-E of the Income Tax Assessment Act 1997 and the Commissioner can exempt an entity from this reporting or parts thereof under s815-365 of this Act.

This guidance outlines the general principles and processes we follow when considering an exemption request from a particular entity with respect to some or all of its Country-by-Country (CbC) reporting obligations. The approach outlined here attempts to support the underlying policy intent of CbC reporting whilst balancing that approach with the Government’s commitment to red tape reduction. The guidance represents our transitional administrative practice until the planned 2020 review of CbC reporting.

Who can request an exemption?

1. A significant global entity (SGE) that has Country-by-Country (CbC) reporting obligations, or its authorised representative, may request an exemption from some or all of its obligations by emailing CbCReporting@ato.gov.au.
2. If you are not the SGE’s authorised representative, you will need to provide a letter of authority from the SGE to request an exemption on their behalf.

What should you include in your request for an exemption?

3. You should set out the facts and circumstances relevant to your CbC reporting obligations, including:

• the statements from which you seek exemption (i.e. one or more of the CbC report, master file and local file)
• the reporting period(s) for which you seek exemption
• the name(s) and, where applicable, TFN(s) or ABN(s) of the entity or entities for which you seek an exemption
• the entity type (for example, company, partnership or trust) and tax residence of the entity for which you seek an exemption
• the name of your global parent entity, the country in which it is a tax resident and, if known, its taxpayer identification number in that country
• your reasons for seeking an exemption
• any documents supporting your request

4. Examples of information or documentation that may support an exemption request might include:

• correspondence with your global parent entity
• references to information contained in documents previously lodged with us, for example, in your income tax returns, International Dealings Schedules (IDS) and the annual compliance reports associated with your Advance Pricing Arrangement (APA) applications
• correspondence from a relevant tax authority (in English or a certified English translation) regarding any exemptions your global parent entity may have in respect of CbC reporting
• demonstration of any potential compliance costs of meeting your CbC reporting obligations.

When should you request an exemption?

5. It is recommended that you make an exemption request as early as possible to allow us to make and notify you of our decision before the statutory due date.
6. If you make an exemption request close to the statutory due date, you may also need to make a request for an extension of time to lodge.

When will we respond to your exemption request?

7. We aim to respond within 28 days of you making a request and after receiving all the relevant information.

How will we decide your exemption request?

8. We will decide each exemption request on its merits having regard to all relevant facts and circumstances and having regard to the purpose of CbC reporting, including the factors referred to below.
9. No single factor stated below is determinative. We will consider each request in the context of the totality of your circumstances and the purpose of CbC reporting.
10. We may request further information to enable timely consideration of your exemption request.

What factors will we take into account when considering exemption requests?

11. We will consider the following:

• whether you are currently subject to a risk review or audit (active compliance product)
• whether you have any international related party dealings (IRPDs) or only have low risk IRPDs (for example, IRPDs in the ‘Exclusions List’)
• whether you have IRPDs with entities in ‘specified countries’ listed in the IDS instructions that most closely correspond to the relevant reporting period(s)
• any other factors we consider relevant.

12. For exemption requests relating to the CbC report or master file, we will take into account a range of additional factors, including whether:

• your global parent entity is subject to CbC reporting in its country of tax residence
• your global parent entity has been granted an exemption in its country of tax residence from providing the CbC report or master file and, if so, the reasons the exemption was granted
• your global parent entity is required to prepare a master file in its country of residence (see paragraph 27 below)
• there is minimal likelihood of Australia being obliged to automatically exchange your CbC report with another jurisdiction. For example, this may be the case if you do not have foreign tax resident entities consolidated for accounting purposes, or you do not carry on a business through a permanent establishment in another jurisdiction.

[ATO website – CbC reporting exemption] [LTN 187, 27.9.16]