Tax transparency measures
Before the enactment of Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015 on 12 November 2015, the income tax transparency laws in section 3C of the Taxation Administration Act 1953 required the Commissioner of Taxation to publish, each year, certain income tax information for all corporate tax entities (ie, companies and entities taxed like companies) with reported total income of $100 million or more, commencing with the 2013-14 income year.
Under these measures, the Commissioner is required to publish the entity’s name and Australian Business Number, total income, taxable income or net income (if any) and income tax payable. All information published under the income tax transparency laws is sourced from taxpayers’ tax returns.
Under the Act specified above, the law was amended (with effect from 12 November 2015) to provide an exemption from these income tax transparency laws for companies that satisfy all of the following conditions:
- The company must be an Australia resident private company.
- The company must not be the wholly-owned subsidiary of a foreign corporate group.
- The company must not have a level of foreign shareholding greater than 50 per cent.
In its consideration of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015, which was introduced into the House of Representatives on 16 September 2015 (and is still not yet law), the Senate made amendments to the Bill including that:
- The exemption for private companies from the income tax transparency measures be repealed.
- Corporate tax entities that are ‘significant global entities’ be required to provide to the Commissioner, as soon as practicable after the end of the income year, a general purpose financial report for the income year. An entity will be a ‘significant global entity’ for a period if it is a ‘global parent entity’ whose ‘annual global income’ for the period is AU$1 billion or more, or it is a member of a group of entities that are consolidated for accounting purposes as a single group and the ‘global parent entity’ of the group has annual global income for the period of AU$1 billion or more.
- The Commissioner be authorised to determine, on application by an Australian-owned private company, that the income tax transparency measures will not apply to the company, if the Commissioner considers that to make the information publicly available may be significantly prejudicial to any of the entity’s current or future commercial negotiations.
On 12 November 2015, the House of Representatives formally disagreed with the amendments to this Bill made by the Senate. An effect of this is that the exemption for certain private companies from the income tax transparency laws remains in place. Any further developments on this will be reported in future TaxTalk editions.
There has been no change to the requirement for the Commissioner to publish certain tax information in relation to Minerals Resource Rent Tax (MRRT) or Petroleum Resource Rent Tax (PRRT) taxpayers. The first annual report from the Commissioner under these transparency measures (covering income tax, MRRT and PRRT) is expected to be released in December 2015.