15 Apr 1111 NTLG Reportable Tax Positions
Paul McCartin Fellow (PwC) and Tax Counsel Deepti Paton ATIA attended a National Tax Liaison Group Consultative Meeting on the ATO’s Reportable Tax Position Project on Tuesday 12 April 2011
At this meeting the ATO informed participants that the project is intended to encourage and facilitate a shift towards real time reporting, disclosure and resolution of issues facing major corporate taxpayers. The ATO intends to use this project to encourage a closer working relationship with major corporate taxpayers to allow uncertain issues to be resolved in collaboration with the ATO within a time frame that provides taxpayers with greater certainty in relation to their tax affairs.
It is currently envisaged that the ATO’s reportable tax positions schedule will be mandatory for approximately 80-100 largest economic groups in Australia for the income year commencing 1 July 2011, being those groups assessed as being ‘higher risk taxpayers’ or ‘key taxpayers’ under the large market Risk Differentiation Framework. The schedule will need to be lodged along with the company (or head company of a consolidated group)’s income tax return for the income year.
In order to prevent the need for duplicate disclosures, taxpayers with Income Tax Annual Compliance Arrangements in place for that income year will likely not be required to lodge the schedule. Similarly, taxpayers with Advance Pricing Arrangements will likely not be required to include tax positions in relation to transfer pricing matters covered by the APA on the schedule. Furthermore, it is envisaged that all issues disclosed to the ATO’s satisfaction prior to the lodgment date of the income tax return will not need to be disclosed on the schedule.
It is envisaged that the following details will need to be included on the schedule:
- A concise description of the material facts relating to the reportable tax position; and
- A listing of the relevant statutory provisions, case law and / or ATO view applied.
In addition to the above, matters arising for discussion at this meeting included:
- How to define a “tax position” i.e. whether at a transactional or project level
- When a tax position becomes “reportable”
- The importance/relevance of accounting standards
- When the schedule may become mandatory for a wider range of taxpayers
- How the schedule is likely to affect taxpayer behaviour
- The effect of the disclosures required on legal professional privilege or the accountant’s concession
- Whether the project warrants examination of the appropriateness of current review periods
Members seeking additional detail on this issue are encouraged to contact us at Tax Policy.