Australia introduces mandatory public Country-by-Country reporting from 1 July 2024

Australia has now passed legislation mandating Public Country-by-Country Reporting (“CbCR”), with effect for income years commencing on or after 1 July 2024. This means that the relevant reporting years and deadlines should generally be as follows:

This follows on from earlier Public CbCR developments reported here:

Public country-by-country reporting – Updated draft legislation
ATO announces key changes to Country-by-Country (CbC) reporting regime

• The Australian Public CbCR rules apply to global groups which satisfy all of the following criteria:
• Global consolidated income (revenue) of A$1 billion or more;
• Australian-sourced income of A$10 million or more;
• Global parent entity is a company, a partnership with partners that are companies, or a trust with a corporate trustee.

Key informational requirements include the following:

• the Public CbCR document must include a statement about the group’s “approach to tax”. This is expected to be similar to the requirement from the Global Reporting Initiative (GRI) 207, and will cover the approach an entity takes to engaging with stakeholders, including how it engages with tax authorities, is important information for stakeholders and investors to assess an entity’s reputational risk.;
• financial (including revenue from related/unrelated parties, profit before tax, book value of tangible assets), tax (including cash and accruals), and headcount data must be provided by jurisdiction, for Australia as well any “specified jurisdiction”. In this regard, on 18 December 2024, the Government released an initial Determination, to specify the jurisdictions for which the ultimate reporting parent must publish selected tax information. Without replicating the list in full, it essentially replicates the list of "specified countries" for CFC purposes (and so includes in particular Hong Kong, Singapore and Switzerland) with the notable exclusions being Cyprus, Ireland, Liechtenstein, Luxembourg and the Netherlands.

Other key points:

• The global parent entity will be required to submit the Public CbCR document to the ATO (subject to potential administrative guidance from the ATO, e.g. regarding the use of an agent);
• other ATO administrative guidance is likely to follow in due course – as well as the list of “specified countries”;
• the Public CbCR information is additional to, and not a replacement for, the existing “confidential” CbCR details which the global parent entity must generally lodge (and which is then automatically shared with the ATO under existing international exchange agreements), in order to satisfy the Australia CbCR requirements;
• The financial information must be based on the audited consolidated financial statements as prepared (or those consolidated financial statements that would exist if they were prepared);
• Exemptions may be requested in some very limited circumstances. There is a specific reference to certain “commercially sensitive information”, which the ATO may consider granting an exemption for, but this would in practice be applied very strictly and would likely only extend to the particular information in question (and not the entire lodgment).
• The ATO will publish the CbCR on a Government website shortly thereafter.
• Failure to lodge penalties (currently of up to A$825,000) will apply if the Public CbCR is not lodged on time.

Key impacts

Australia’s Public CbCR model is more comprehensive than the EU’s Public CBC Directive, so impacted groups will need to ensure they are meeting the requirements in all relevant jurisdictions with their Public CBCR.

It also requires the use of the audited consolidated financial statements – which is more prescriptive than the EU approach, which allows a broader choice of options (including “bottom-up”). Again, groups will need to ensure they are meeting all requirements.

In summary, impacted groups will need to ensure that they are ready to commence preparation of the Public CbCR document, and where they are subject to more than one Public CbCR regime, consideration should be given to preparing one document which satisfies all applicable regimes.

FOR MORE INFORMATION

If you would like to learn more about the topics discussed in this article, please contact your local RSM office.