The onerous Australian country-by-country reporting obligations

Under Australian law, SGEs are required to lodge three statements with the ATO within 12 months of the end of the income year: a local file, master file, and a CbC report.

Of note, the Australian local file deviates significantly from the OECD’s local file as set out in the OECD Transfer Pricing Guidelines and what is seen in other countries. Instead, the Australian local file is a three-part file in the ATO’s prescribed form that includes detailed transaction disclosures for all international related party dealings (including counterparties, amounts, transfer pricing method, agreements etc.), and information on the business.

Although preparation of transfer pricing documentation in Australia is not compulsory, it must be prepared in line with the requirements set out in the legislation to be eligible for penalty protection where there is a transfer pricing adjustment by the ATO. It is noted that an OECD-style local file will not suffice, as Australian-specific legislation outlines additional requirements that assess the arm’s length nature of the dealings and whether a transfer benefit has been received.

For SGEs, the penalty for late lodgments ranges from AUD 111,000 to a maximum of AUD 555,000, and applies for each separate CbC statement. These are harsh penalties to ensure that SGEs meet their Australian compliance requirements.

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Photo: Maurizio De Mattei - stock.adobe.com