Federal Budget 2016-17 | Tax Transparency Codes

By admin - May 4, 2016

In addition to the existing transparency measures already in effect, the 2016 Budget is seeking to encourage large corporates – particularly multinationals – to voluntarily disclose further information about their tax affairs to interested parties.

This recognises that the actions of a few businesses, particularly large multinationals engaging in aggressive tax avoidance, have impacted the reputations of many businesses doing the right thing. 

A Board of Taxation report issued to the government on 16 February 2016 regarding the Voluntary Tax Transparency Codes recommended split reporting for large corporates into the following categories:

TTC Disclosure

Who

Minimum Standard of Reporting

Part A

Large and Medium Businesses – aggregated Australian turnover in excess of $100m but less than $500m

A reconciliation of accounting profit to tax expense and to income tax paid or payable

Identification of material temporary and non-temporary differences

Effective company tax rates for Australian and global operation (pursuant to AASB guidelines)

Part B

Large Businesses – aggregate turnover in excess of $500m

Approach to tax strategy and governance

A tax contribution summary for corporate taxes paid

Information on international related party dealings, financing and tax concessions

 

It was recommended that medium businesses, i.e. businesses with an aggregate turnover of $100m-500m, would disclose further reporting to cover Part A, whilst large businesses, i.e. with an aggregate turnover in excess of $500m disclose sufficient material to address both Part A and Part B. 

In addition, the government is seeking community input on the OECD’s proposals for mandatory disclosure rules, which require tax advisors and/or taxpayers to make early disclosures of aggressive tax arrangements (often before income tax returns are lodged) and to provide tax authorities with timely information on arrangements that have the potential to undermine the integrity of the income tax system. 

A voluntary code will provide a framework for large businesses to consider its position on transparency matters. However we are concerned that this represents another compliance cost and red tape for private business.

 

 


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