The Board of Taxation has released a consultation paper which proposes a number of practical measures to increase the consistency of the information in Voluntary Tax Transparency Code-based reports.
Australia has a Voluntary Tax Transparency Code (TTC) to enable businesses to provide greater public disclosure on their tax information through a Tax Transparency Report. Since it was introduced in 2016 there have been developments both locally and globally on the tax transparency landscape and hence the Board of Taxation sought to review the TTC to identify how its framework can be improved.
As a result of the review the Board has issued on 26 February 2019 a Consultation Paper ('the Paper') seeking feedback on a draft revised TTC. The Paper provides the background to and the text of the draft updated Tax Transparency Code. Submissions on the Paper are due by 26 March 2019.
The Paper proposes a number of practical measures to increase the consistency of the information in TTC based Tax Transparency Reports ('TTRs'). These measures appear to address a concern there was variable content in the reports to date reducing their usefulness and impact.
Examples of these proposed measures include an expectation to outline the ‘basis of preparation’, statements on a number of better practices and more detailed guidance on practical issues such as reporting of tax paid versus tax payable and calculation of the effective tax rate.
It is these practical issues and measures to improve the detail and consistency of the quantitative components of TTRs that arguably can have the greatest positive impact. Publishing more concrete and measureable data that can both explain the drivers of the tax position of a group and help remove misconceptions in those positions should help support policy objectives in the area.
Importantly for many readers the Paper does not propose a change to the voluntary nature of publishing a TTR, nor are other measures to increase the number of groups publishing them proposed. It also maintains the current guidance on defining the size of groups that should contemplate creating a TTR.
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