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- Disclosure required of Uncertain Tax Positions
Disclosure required of Uncertain Tax Positions
- By Daren Yeoh
- Published 17/05/2011
- Transfer Pricing Insights
- Unrated
The Australian Taxation Office (ATO) has announced its intention to develop a new reportable tax position (RTP) schedule to the 2012 company tax return. The ATO advises that the schedule will apply to income years starting on or after 1 July 2011.
This new disclosure obligation will mean that taxpayers will be required to overly highlight their own tax exposures on an annual basis – rather than the ATO requesting information on a needs basis.
The ATO will provide a written notification to taxpayers who are required to complete the schedule. It appears that the ATO will roll out the schedule to the taxpayers in the “larger end of town”.
This will mean that affected taxpayers will have to identify any reportable tax positions and disclose them to the ATO. The ATO defines reportable positions to include:
If you have any queries in relation to this article, please contact Daren Yeoh.
This new disclosure obligation will mean that taxpayers will be required to overly highlight their own tax exposures on an annual basis – rather than the ATO requesting information on a needs basis.
The ATO will provide a written notification to taxpayers who are required to complete the schedule. It appears that the ATO will roll out the schedule to the taxpayers in the “larger end of town”.
This will mean that affected taxpayers will have to identify any reportable tax positions and disclose them to the ATO. The ATO defines reportable positions to include:
- a material position that is more likely to be incorrect. Presumably taxpayers will be exposed if they make an erroneous assessment in relation to the degree of “correctness” in relation to a particular tax position;
- a position in respect of which uncertainty about taxes payable or recoverable is recognised and/or disclosed in the taxpayer's or a related party’s financial statements. In the US, reporting entities may be required to disclose uncertain tax positions under Fin 48. It is noted that this accounting treatment/disclosure is not currently yet required in Australia; and
- a transaction (the “reportable transaction”) in respect of which both of the following apply:
- the taxpayer recognises more than A$200 million of income in their financial statements for the current income year and treats less than 50% of such income as assessable income in the current income year; and
- the transaction involved a change to the effective ownership or control of an entity (or entities), business (or businesses) or asset (or assets).
- A statement describing the facts that underlie the position they have taken;
- The basis for their position - that is, the relevant case law, legislative references and/or ATO view they relied on to support the tax position they have taken;
- Related party involved - this is a Yes/No question to establish whether the tax position they have taken is in relation to a related party transaction; and
- Reportable transaction involved - this is a Yes/No question to establish whether the tax position they have taken is in relation to a reportable transaction as defined above.
If you have any queries in relation to this article, please contact Daren Yeoh.
Contact
Daren Yeoh
T +61 3 8635 1994
dyeoh@moorestephens.com.au
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