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Australia: Country-by-country reporting, Local and Master files detailed design
Australia: CbC reporting, Local and Master files
The Australian Taxation Office (ATO) has published a Local file / Master file detailed design on the ATO website to serve as guidance for taxpayers concerning the practicalities in completing country-by-country (CbC) reporting by “significant global entities.”
Among the provisions in the ATO guidance:
- The detailed design sets out requirements for preparing and lodging the Master file and Australian Local file using the XML schema format. In order to be able to file, this will require the XML schema to be developed in house, licensed or outsourced.
- The detailed design clarifies that the Australian Local file has a number of objectives covering confirmation on what is being filed, administrative information on the Master file and CbC report (including the notification requirements when an overseas entity is lodging the CbC reporting), as well as all the transactional and business information to be provided in the Australian Local file short form, part A and part B sections.
- The design of the XML schema allows for separate submissions of the three components of the Local file (short form, part A and part B) and the Master file—to deal with the different lodgement timing options if using the administrative concession to obviate the need for section A of the “international dealings schedule” (IDS).
- There are significant changes to the naming conventions of transaction types, category codes, and transfer pricing methods compared to the IDS.
Other feedback from the ATO is that:
- The portal is unlikely to be open for Australian Local file submissions until 1 July, with tax return stationary changes likely in June. This will make it difficult for significant global entities wanting to file early (for example, they are in a tax refund position or because the statutory due date is sooner, such as trusts). Once open, the portal will be able to accept all or parts of the XML schema.
- The ATO is developing instructions for completion of part A that are expected to be released in late May 2017.
KPMG observation
Given the unique aspects of Australia’s implementation of the Local file, the ATO is seen as one of the most advanced tax authorities in terms of providing CbC reporting guidance—albeit, undoubtedly, there will continue to be questions along the way as taxpayers seek to determine that they are not inadvertently caught by the substantially increased administrative penalties.
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