RSM Australia

Significant Global Entities: Country-by-Country Reporting obligations now law

Royal Assent was given on 11 December 2015 to the ‘Combating Multinational Tax Avoidance’ Act.  The new law:

  • defines a new entity concept: Significant Global Entity (‘SGEs’); and
  • subjects SGEs to new tax obligations.

This Tax Insight focuses on the new Country-by-Country Reporting (CbCR) obligations, which are also the subject of the ATO’s Law Companion Guideline LCG 2015/3, released on 17 December 2015.

Who is affected?

Only entities which are SGEs as defined, are required to satisfy the CbCR obligations.

An SGE is either a single entity, or every member of a multinational group, where the annual global income of the entity or group, taken from the relevant global financial statements, exceeds $A 1 billion. (The Commissioner can deem an entity/group to exceed the threshold in the absence of global financial statements, but based on other available information.)

When does CbCR commence?

The CbCR obligations first apply to the income year that commences on or after 1 January 2016 (‘reporting year’). An entity will be required to lodge CbC Reports if it is an SGE in the income year immediately preceding the reporting year (‘eligibility year’). The SGE then has 12 months to lodge the CbC Reports.

Eligibility year Reporting year Lodging year
2016 2017 2018

The first reporting year for the entities with different year ends will be:

Year end

31 December:

1 January – 31 December 2016

31 March:

1 April 2016 – 31 March 2017

30 June:

1 July 2016 – 30 June 2017

30 September:

1 October 2016 – 30 September 2017

Reports required to be lodged

The legislation as written requires each SGE to lodge electronically, and in the ‘approved form’, three separate reports. These are the three reports detailed in the G20/OECD BEPS Project Action 13 Report on transfer pricing documentation. They are referred to as:

  • The master file (global group overview);
  • The local country file (Australian operations only); and
  • The Country-by-Country Report (global summary of key metrics). 


The Action 13 Report clearly anticipated the CbC Report would be an ‘exchangeable’ document, to be shared between Revenue Authorities through the Exchange of Information protocols. The OECD has developed an XML schema to facilitate exchange, in a similar manner to the Common Reporting Standard (CRS) implementing the Automatic Exchange of Information (AEoI) standard.The OECD has not developed a XML schema for the exchange of the master file or the local country file; the ATO seems to be leading the global pack in this regard.

Reporting exemptions

The new rules provide the ATO with a power to exempt entities or classes of entities from lodging some or all of the reports. The LCG indicates the exemptions will be granted sparingly, but gives an instance of an exemption being granted where the information may be expected to be made available from an overseas parent company through AEoI.

This would make sense of the proposed reporting framework as set out in the Action 13 Report.

  • The parent company of an MNC group would prepare a global master file and the CbCR (as it has access to all the relevant data), and lodge these with its home Revenue Authority, which in turn would exchange those Reports with eligible information-sharing Revenue Authorities elsewhere; and
  • Either the Australian subsidiary, or the global parent company would lodge the Australian local country file with the ATO directly, or with the parent’s home Revenue Authority for exchange. 

The process for seeking lodgement exemption is still a work-in-progress, but it should be expected the Australian company may be relieved of a lodgement obligation where one, two or all the reports are made available via the MNC parent company.

But where the parent company is located in a jurisdiction which does not require lodgement of these reports, or is on a deferred implementation timeline, or does not have an effective information exchange arrangement with Australia, then the Australian subsidiary will be expected to lodge all three reports.

Other comments from the LCG

These three reports are separate from and in addition to the International Dealings Schedule. Lodging an IDS does not relieve from an obligation to lodge CbC Reports. 

Similarly, the presence of an Advance Pricing Arrangement or Annual Compliance Arrangement does not relieve from the CbC Reporting obligations. 

The ATO has undertaken to design the master file and local country file approved forms in a way which minimises the duplication of data to be provided through other means.  But invariably there will be significant duplication, as the master file and local country file requirements do not relieve from the obligation to prepare contemporaneous transfer pricing documentation as is already required by the tax law.

The ATO is conscious that some Australian subsidiaries may not have access to the global information required to compile the necessary master file and CbC Report. This would be, for instance, where the parent company’s home jurisdiction does not currently require the preparation of these reports. If that applies, the ATO invites an early dialogue to determine the most appropriate resolution. The ATO has suggested that for a first year, a lodgement exemption may be appropriate, but that will not be a sustainable position – lodgement of these reports is a statutory obligation, with penalties applying for a failure to lodge.


  1. Determine whether you are an SGE, or may become an SGE in the near future. If so, then you need to consider how you will satisfy the CbCR requirements, and for which year.
  2. Determine whether your ultimate parent company may be preparing these reports, and if so, whether the Reports will be available for exchange between the parent’s home Revenue Authority, and the ATO. 
  3. If you are an Australian subsidiary, and your foreign parent company will not be obliged to prepare these reports under its home country law, consider how you will obtain the necessary non-Australian financial information in order to satisfy the reporting obligations. Where appropriate, we will explore with the ATO the most appropriate way forward.
  4. Overall, if you are an Australian parent company (with worldwide reporting obligations) or only an Australian subsidiary of a foreign owned multinational group, and you are an SGE, you should prepare a blueprint for meeting your global, or Australian only obligations. This should be approached on a global basis, in conjunction with the global tax team, and taking into account the required information and any systems changes necessary to collect that information.


Please contact your local RSM tax adviser for further assistance.

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