Australia has adopted Country-by-Country Reporting (CbCR) regulations as part of its commitment to the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13 framework. The Australian Taxation Office (ATO) is responsible for administering CbCR compliance, ensuring that multinational enterprises (MNEs) operating in Australia adhere to international tax transparency requirements.

This guide provides CFOs and tax professionals with a detailed overview of Australia’s CbCR framework, including applicability, reporting obligations, filing procedures, penalties, and key resources.

Applicability of CbCR in Australia

Criteria for Reporting

CbCR requirements apply to MNE groups that:

• Have consolidated global revenues exceeding AUD 1 billion in the preceding financial year.
• Include entities or permanent establishments (PEs) in Australia.

Local Filing Requirements

An Australian entity within an MNE group may be required to submit a CbC report if:

• It is the Ultimate Parent Entity (UPE) of the group.
• It has been designated as the Surrogate Parent Entity (SPE) for CbCR purposes.
• The UPE is located in a jurisdiction that does not require CbCR or does not have a qualifying exchange agreement with Australia.

Relevant Legislation

• Tax Administration Act 1953 (Subdivision 815-E) – Implements Australia’s CbCR obligations.
• OECD BEPS Action 13 – Forms the basis of Australia’s CbCR framework.

Reporting Requirements

Content of the CbC Report

The CbC report must include financial and tax-related data for all jurisdictions in which the MNE operates, including:

• Total revenues (related and unrelated party transactions).
• Profit or loss before income tax.
• Income tax paid and accrued.
• Stated capital and retained earnings.
• Number of employees.
• Tangible assets other than cash or cash equivalents.

Notification Requirement

• All Australian entities within an MNE group must notify the ATO regarding which entity will file the CbC report and in which jurisdiction.

Submission Platform

• Reports must be electronically filed via the ATO’s online services for business using the OECD CbCR XML schema.

Resource

Filing instructions and guidance are available on the Australian Taxation Office (ATO) website:
ATO – Country-by-Country Reporting

Filing Deadlines

• CbC Reports: Must be submitted within 12 months after the end of the MNE’s financial year.
  • Example: For a financial year ending 30 June 2023, the report must be filed by 30 June 2024.
• Notifications must be provided before the end of the financial year.

Penalties for Non-Compliance

Penalties and Consequences

Non-compliance with Australia’s CbCR obligations may result in:

• Administrative penalties based on the size of the entity and the duration of non-compliance.
• Increased scrutiny from the ATO and international tax authorities.
• Potential criminal charges for deliberate tax avoidance or fraud.

Mitigation Measures

• Companies can apply for extensions or appeal penalties if they can demonstrate reasonable cause for non-compliance.

Confidentiality and Data Exchange

Data Protection

• The ATO ensures that CbC reports remain confidential and are only used for tax risk assessment purposes.
• Reports are automatically exchanged with jurisdictions that have a bilateral exchange agreement with Australia.