Country by Country (CbC) reporting for Significant Global Entities
Country by country (CbC) reporting applies to income years commencing on, or after, 1 January 2016.
Significant Global Entities (SGEs) need to electronically lodge three statements (the local file, master file and CbC report) with the Australian Taxation Office (ATO). The first report is due on 31 December 2017, which may be too soon for some entities to comply with.
The good news is that the ATO may consider granting transitional exemptions for the CbC report and master file for the first year on the basis that:
- The global parent entity is not subject to CbC reporting for the income year ended 31 December 2016
- The CbC report and master file are not required to be prepared or lodged in any other tax jurisdictions outside of Australia by the time the CbC report and master file are due for lodgment (31 December 2017)
- You commit to filing the CbC report and master file for the periods after the first year
The exemption to the local file is unlikely if there are international related party dealings (IRPDs) in existence.
However if you have only low risk IRPDs (as included on the ATO exclusion list), then you should consider including the local file in the application for exemption.
Due to the short time-frame to the first reporting deadline 31 December 2017, it is recommended that you make an exemption request as early as possible to allow the ATO to make and notify you of their decision before the statutory due date.
Please contact us for more information, if you have any queries in regards to applying for reporting exemptions.
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
Judy She
Senior Accountant
T: 02 9984 7774
E: judys@northadvisory.com.au
“If a company’s consolidated global income is A$1 billion or more, it — and associated entities — may fall into scope even if their Australian operations are relatively modest.”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
SGE classification is broad — large global-income groups are in scope, even if their Australian footprint is small.
Any entity that forms part of a global group earning at least A$1 billion annually may attract CBC reporting obligations under Australian law.
CBC reporting provides comprehensive transparency over group-wide operations, profits, taxation and intercompany dealings.
Through the CBC report, Master File, and Local File, tax authorities gain a jurisdiction-by-jurisdiction breakdown of revenues, profits, taxes paid and related-party transactions.
Compliance is mandatory and recurring — each income year requires fresh assessment and potential lodgement.
Entities must re-assess their global income and group structure annually. If in scope, they must file CBC reports within 12 months after year-end.
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Frequently Asked Questions
What is a “Significant Global Entity” (SGE)?
An SGE is an entity (company, trust, partnership, etc.) that forms part of a global group whose annual global income reaches or exceeds A$1 billion. That group may consist of entities consolidated for accounting purposes or a “notional listed company group.”
What triggers Country-by-Country (CBC) reporting obligations?
CBC reporting applies when an entity qualifies as a “CBC reporting entity,” which generally means the group has met the SGE threshold and is either the global parent or part of a consolidated or notional listed group. Once in scope, the group must lodge CBC reporting documents.
What documents need to be lodged under CBC reporting?
Entities in scope must lodge three reports per income year: a CBC report, a Master File and a Local File (or short-form local file where permitted). These documents disclose global revenues, profits, taxes paid, intercompany transactions and group structure.
Are there deadlines for lodging CBC reports?
Yes — CBC reporting statements generally must be lodged within 12 months after the end of the relevant income year.
What happens if an SGE fails to self-assess or lodge the required reports?
Failure to assess or report when required places the entity at risk of compliance action by the tax authority. Non-compliance attracts scrutiny, and may lead to penalties or other adverse outcomes.
What is Country-by-Country (CbC) reporting?
Country-by-Country (CbC) reporting is a requirement for Significant Global Entities (SGEs) to electronically lodge key international tax reporting statements with the ATO, starting from income years commencing on or after 1 January 2016.
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