In brief
The Australian Parliament has passed legislation that will introduce public country by country (CBC) reporting obligations with effect from 1 July 2024. This will require large multinational groups with an Australian presence to submit data on their global financial and tax footprint to the Australian Taxation Office (ATO), which will be made available publicly. This new obligation will apply in addition to existing confidential CBC reporting regime and any other public CBC reporting regime that a multinational group may be subject to (e.g. the European Union regime).
In detail
Scope of the rules
Key features of the rules are summarised below:
Item |
Detail |
| Who does this apply to? | Groups meeting all of the following criteria:
|
| When? |
|
| Who needs to submit the report? | The global parent entity is responsible for filing the CBC report with the ATO.
|
| What needs to be reported? |
|
| What are the penalties for non-compliance? | 2,500 Commonwealth Penalty Units, which equates to AUD$825,000 based on the current value of a penalty unit.
|
| Are exemptions available? | Yes, at the ATO’s discretion.
|
Matters to be considered in administrative guidance
The ATO will be responsible for issuing guidance on several practical matters relating to the implementation of the new regime. The ATO has indicated that it expects to issue guidance by March 2025. Matters on which guidance is likely to be needed include:
- Lodgment mechanics: For example, confirming the technical specifications of the file (the specific XML schema and validation rules), the portal through which files will be able to be submitted, whether any registration is required by the global parent entity, whether files will need to be submitted by an agent and who is required to approve a file prior to lodgment.
- Exemptions: The ATO website indicates that public guidance on the process for seeking exemptions is expected to be available by March 2025. The law is not prescriptive on the circumstances in which exemptions will be considered, but the explanatory memorandum notes that it may include considering whether disclosure of the data would impact national security, breach Australian or foreign laws, or result in substantial ramifications for an entity by revealing commercially sensitive information.
- Definitions and interpretations: Technical guidance may be needed on specific definitions that require clarification for the public CBC report.
(Addendum 20 January 2025) The 'specified’ countries for which the required information will need to be reported separately on a CBC basis has now been made and registered (17 December 2024). It covers 40 countries including Singapore, Switzerland and Hong Kong, and is broader than that adopted under the EU public CBC reporting regime.
Comparison with other regimes
While there is overlap between the Australian public CBC reporting requirements and other regimes, such as the European Union public CBC reporting directive and existing confidential CBC reporting, there are several differences. This means care will need to be taken to ensure that the data compiled for each obligation is aligned with the relevant specific requirements.
Key differences include:
- The data source must be the consolidated financial statements (top-down data), whereas other regimes provide more flexibility to use other data such as bottom-up local entity financial statements.
- Certain definitions are different. For example, “related party revenues” only include international related party revenues for the Australian public CBCR, whereas the confidential CBCR would typically also include domestic related party revenues between entities in the same jurisdiction.
- Additional commentary on tax matters is required, including the statement on the Group’s approach to tax and explanations of effective tax rates in particular jurisdictions. These requirements are based on Global Reporting Initiative (GRI) 207; however, that reporting standard has not been widely adopted and therefore these requirements will be new for the majority of multinational groups required to submit public CBC reports. Further differences are highlighted in a comparison provided by Treasury to the Senate Committee that reviewed the Bill. This is not an exhaustive list, and other nuances will need to be considered as groups prepare to report for the first time.
The takeaway
Although there is still time before the first reports will be due, it is not too early for groups to begin to prepare for the public CBC reporting obligations. This may include:
- Evaluating whether you fall within the scope of the rules.
- Ensuring relevant stakeholders within your organisation are aware of the upcoming obligations.
- Reviewing the readiness of your systems and processes to gather the data needed, and to be confident that the different data required across Australian public CBC reporting, confidential CBC reporting, EU public CBC reporting, Pillar Two, and other tax obligations can be reconciled and explained.
- Considering your communications strategy and whether it may be appropriate to voluntarily publish additional information or explanations to provide context for the CBC data that the ATO will publish.
For more on country by country reporting obligations, watch our October Tax Briefing.
Nick Houseman
Georgie Hockings
Greg Weickhardt
Sarah Saville
Chris Vanderkley
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