This Wednesday, 15 June Paul McCartin FTIA (PwC) and Tax Counsel Deepti Paton ATIA attended a meeting of the NTLG Working Group on Reportable Tax Positions.
By way of background, the ATO’s Reportable Tax Positions project refers to a schedule to the income tax return on which the taxpayer is required to disclose all “reportable” tax positions taken in relation to that income year. Further details in relation to this project may be found here.
It is currently envisaged that this 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.
In order to prevent the need for duplicate disclosures, taxpayers with Income Tax Annual Compliance Arrangements in place for that income year are not expected to be required to lodge the schedule. In addition, an issue is not required to be disclosed on the schedule where it has been ‘otherwise adequately disclosed’ prior to lodgment.
At this meeting, the ATO provided members with an overview of the current status of the project and a current draft of the schedule.
The ATO noted that taxpayers in the pilot group will be informed of the requirement to fill out the schedule by way of letter to the address for service of notices for that taxpayer in the coming weeks.
The ATO is currently looking to finalise the instructions accompanying the schedule by 30 September 2011.
As such, members focussed on discussing the issues that need to be resolved prior to the launch of the schedule on 1 July 2011, including:
- The implications of the requirement to disclose reportable tax positions in order of materiality/significance, and how ‘materiality’ may be determined.
- The expected detail and allowed length of information to be provided on the schedule.
- The implications of disclosure on legal professional privilege or the accountant’s concession.
- The meaning of “otherwise adequately disclosed”.
The Tax Institute will continue to consult with the ATO as this project develops (including in relation to the instructions accompanying the schedule) in the coming months.
Members who would like further detail are encouraged to contact us at Tax Policy.