Findings report - Public and multinational business disputes and settlements 2023–24

About this report

This is the second year we are publishing our insights on settlements with public and multinational businesses.

This report broadens the scope reported last year (which focused solely on settlements for 2022–23) to include information on disputes and expand on the information included in the ATO annual report.

This report outlines our key findings and observations on income tax and GST disputes completed or undertaken in 2023–24 in relation to our:

• audit program^Footnote1
• independent reviews
• objections
• mutual agreement procedures (MAP)
• litigation
• settlements.

Key highlights

• We've observed increasing levels of tax compliance by public and multinational businesses.
  • An additional $2.2 billion was paid voluntarily as a result of ATO preventative compliance intervention.
• We continue to see a consistent number of audits each year.
  • During the year, 24 matters were escalated and endorsed for audit. These matters are ongoing.
  • Throughout the year, we issued income tax assessments to 124 public and multinational businesses raising $2.76 billion in liabilities. Of this, $2.5 billion was raised in respect of 24 different taxpayers following intensive audit and review activities. Separately, total liabilities for GST raised were approximately $363 million.
  • We continue to apply penalties in the appropriate cases. During the year we raised liabilities for penalties of approximately $177 million. Some of the penalties relate to audits finalised in 2022–23. We're still considering penalties for most audits completed in 2023–24.
• Global profit shifting risks continue to be a major focus in our audit program. Global profit shifting arrangements are often complicated, both legally and factually. They typically involve related parties located in low or no tax jurisdictions around the world.
  • Around 65–70% of current income tax audits involve global profit shifting issues.
  • Transfer mispricing, mischaracterisation of business activities and capital flows and withholding tax avoidance issues are among some of the key profit shifting risks currently being investigated.
  • Common dealings under audit include related party finance, intangible migration, embedded royalties, in-bound distributor arrangements and disposal of assets by foreign investors.
  • Nearly 80% of income tax litigation decisions relating to public and multinational businesses handed down in 2023–24 involved issues related to global profit shifting, including transfer mispricing and the application of the general anti-avoidance provisions.
• We continue to investigate arrangements where tax avoidance is a concern.
  • The application of general anti-avoidance provisions, including the diverted profits tax, is being considered in approximately 30% of current income tax audits.
  • Increasing concerns (and audits) related to the mischaracterisation of business dealings is in part driving the increased application of the anti-avoidance provisions.
  • In appropriate cases, the anti-avoidance rules may be applied in preference to or as an alternative to the transfer pricing provisions.
• Where appropriate, and consistent with the Commonwealth's model litigant policy, we seek to resolve disputes by way of settlement.
  • Across all client groups, public and multinational businesses accounted for more than 20% of all parties to settlement agreements (67) and around 92% ($1.8 billion) of the tax revenue secured.
  • Our total settlement variance for public and multinational businesses was around 31%, which means we secured 69% of the disputed amount that we considered payable under our starting position before settlement.
  • The 5 year average variance of 39% for settlements with public and multinational groups is broadly consistent with (or slightly less than) the 5 year average of other key taxpayer segments.
  • Income tax was the predominant revenue type settled. Around 65% of settlements with public and multinational businesses involved global profit shifting risks.

Large business tax contribution

Public and multinational businesses play an important and integral role in the functioning of Australia’s corporate tax system. In 2022–23, they reported:

• $96.6 billion in corporate income tax (70% of total company tax)
• $48.2 billion in GST (62% of total GST liabilities).

Corporate tax is highly concentrated with:

• the largest 10 businesses paying 30% of all corporate tax
• the largest 100 companies paying 55%
• large businesses (corporate groups with over $250 million turnover) paying around 69%.

Our annual corporate tax transparency report provides insights into how much income tax is paid by our largest taxpayers.

Large business also collects and remits a significant amount of GST, collecting and remitting over 57% of total GST revenue.

We are responsible for ensuring that large businesses are meeting their Australian tax obligations. We do this primarily through the work of the Tax Avoidance Taskforce and specific GST compliance programs.

Reducing the tax gap

Our tax gap analysis for large corporate groups shows that around 93.5% of income tax is paid without ATO intervention. This increases to 95.8% following ATO intervention. Our Annual tax gap findings offer more detail on this.

Our primary objective is to sustainably reduce the tax gap. We invest significant effort in helping large businesses get it right on lodgment. This provides for a better tax system and overall is a much more cost-effective way of administering the tax system. We do this through our assurance programs, providing certainty through public and private advice and guidance and working with advisors. See the Top 100 justified trust program findings report and the Public and multinational business advice and guidance program findings report.

While the tax gap indicates that large business has some of the highest levels of tax compliance of all taxpayer groups, there'll always be the need to have a well-resourced and robust audit program. The economic characteristics of Australia (i.e. a net capital importer with a high tax rate), means that we are susceptible to profit shifting. The high reliance on corporate tax and high levels of concentration within the very largest entities, means that if tax risk proliferates it can have significant consequences for government revenues.

Through our justified trust programs, we aim to continually monitor the largest businesses in Australia via the Top 100 program and review the tax affairs of the largest 1,000 businesses at least once every 4 years. We also have sophisticated data and analytics programs that enable us to detect tax risk across public and multinational businesses. Where we detect material tax risk, we will undertake an audit to intensively investigate the tax issue and, if necessary, correct the tax outcome. We will also apply penalties in appropriate cases.

Large business compliance outcomes

A look at the revenue impact from large businesses successfully complying with their tax obligations.

Tax Avoidance Taskforce

We receive significant funding from government for the Tax Avoidance Taskforce to ensure large businesses meet their tax obligations. Since the Taskforce commenced in June 2016, we have raised $22.8 billion in liabilities from public and multinational businesses (as at 30 June 2024). Around $12.3 billion of this is attributed to the additional funding provided through the Tax Avoidance Taskforce, with the balance primarily attributable to base funding.

Preventative compliance actions

When determining the total revenue impact we have in a given year, we include the additional tax paid voluntarily as a result of our prior interventions. Common ways this can occur for our interactions with public and multinational businesses include the following.

• Additional tax paid due to our past compliance actions having a lasting effect. Typically, this will be the additional tax collected in later years as a result of locking in go-forward outcomes under settlements, or the elimination of prior year tax losses.
• Estimated additional tax paid voluntarily where we have influenced tax outcomes through our preventative actions, where there is a clear causal connection with our engagements. This can include influencing the tax outcomes of transactions before lodgment in programs such as Top 100 justified trust, private rulings and advance pricing agreements.

For 2023–24 preventative compliance activities resulted in an additional $2.2 billion in tax revenue. The vast bulk of this revenue is due to locking in go forward outcomes through settlements. This is on top of additional revenue that may have been raised via our audit program or reported as settlement collections.

Public groups audit program

Our key compliance programs in relation to public and multinational businesses are run by the Public groups business line. The Public groups audit program typically has between 100 and 150 audits underway at any given time (in addition to other compliance activities). As at 1 July 2024, there were 111 public and multinational business audits in progress. Of these 107 involve income tax issues.

The vast bulk of our audits continue to relate to large businesses included in the Top 100 and Top 1000 programs. Of the audits on hand 40 relate to taxpayers in the Top 100 population and 54 relate to taxpayers in the Top 1,000 population. Almost all of these audits relate to income tax. Some of these taxpayers may be part of the same global economic group, and some taxpayers may be subject to multiple concurrent audits.

During 2023–24, 24 matters were escalated to audit, with around the same number of audits concluding. Of these 24 escalated matters, 9 matters related to taxpayers in the Top 100 population and 11 matters related to taxpayers in the Top 1000 population. Again, some of these taxpayers may be part of the same global economic group, and some taxpayers may be subject to multiple concurrent audits.

Around two-thirds of our income tax audit program is directed at investigating issues related to global profit shifting.

For the purposes of this report, 'global profit shifting' means arrangements that shift profits away from Australia (commonly to low or no tax jurisdictions) and includes common issues such as:

• transfer mispricing
• withholding tax avoidance and minimisation
• mis-characterisation
• thin capitalisation
• treaty shopping
• tax avoidance.

Around two-thirds (50) of the audits relating to global profit shifting involve at least one transfer mispricing related issue, including:

• 9 cases involving related party financing
• 14 cases involving sales, marketing and procurement
• 11 cases involving intellectual property and royalties.

These audits are an intensive investigation of a taxpayer's affairs that can cover one or more issues and income tax years, and can take a number of years to conclude. In over one-third (27) of these audits we are considering the application of our general anti-avoidance rules to determine if there is a purpose of avoiding tax. This may be in addition to considering other provisions such as the transfer pricing or anti-hybrid provisions.

During 2023–24, we issued income tax assessments to 124 companies raising $2.76 billion in liabilities. The bulk of the liabilities ($2.5 billion) was raised against 24 different taxpayers following intensive audit and review activities. Total liabilities for GST raised was approximately $363 million.

Global profit shifting accounted for approximately 80% of liabilities. This reflects 2 things:

• audits related to profit shifting make up a significant part of our audit program,
• while profit shifting adjustments can vary, some cases are materially significant (particularly if adjustments span multiple years).

Among audit assessments, transfer mispricing was prevalent, accounting for 33% of taxpayers, Part IVA (tax avoidance) assessments represented 13%, with capital gains tax and thin capitalisation each reflecting 8%.

As we consider penalties following the conclusion of an audit, we are yet to determine penalties for most audits concluded in 2023–24. We anticipate that penalties will be applied in a number of these cases.

GST audits are not as prevalent in our program as income tax. For 2023–24, 68% of GST liabilities were raised through voluntary disclosures made through the justified trust programs and targeted industry risk reviews, and assessments raised through our focus on international GST issues (such as low value imported goods and digital products).

The following tables show the trend of tax liabilities, interest and penalties over the past 3 years. Total income tax liabilities have grown over the past 3 years, with GST showing more variability.

Interest is calculated as per the statutory formula. Not all amended assessments will attract a penalty under the law. In certain circumstances, penalties may be doubled for taxpayers that are significant global entities. As we typically consider penalties following the conclusion of an audit some of these penalties will relate to audits concluded in 2022–23. Similarly, as noted above, we are still determining penalties for most audits concluded in 2023–24.

Table 1: Income tax liabilities, interest and penalties raised in 2021–22 to 2023–24

Financial year	Tax liability	Interest	Penalties	Total liabilities
2024	$2.52 billion	$0.10 billion	$0.14 billion	$2.76 billion
2023	$1.81 billion	$0.32 billion	$0.50 billion	$2.59 billion
2022	$1.43 billion	$0.44 billion	$1.00 billion	$2.87 billion

 

Table 2: GST liabilities, interest and penalties raised in 2021–22 to 2023–24

Financial year	Tax liability	Interest	Penalties	Total liabilities
2024	$317 million	$7 million	$39 million	$363 million
2023	$190 million	$6 million	$6 million	$202 million
2022	$377 million	$33 million	$3 million	$413 million

Notwithstanding the 3 year increasing trend of income tax liabilities, generally we are observing a reduction in the materiality of many of our audits compared to past years. This is the result of us already having addressed some large arrangements (for example related party finance). However, new emerging issues and business models as well as one-off events such as business disposals, are producing material income tax adjustments.

Tax in dispute

Most taxpayers are typically not required to pay a tax liability following an audit if they are disputing the assessment. However, large business and other high-risk taxpayers are expected to pay all or part of the liability owing. Large business taxpayers are expected to enter a 50:50 arrangement whereby they pay 50% of the tax liability, and fully pay any DPT assessments.

Where the dispute is resolved in favour of the Commissioner (for example via litigation) the remaining 50% of primary tax, interest charges and any tax shortfall penalty are payable to us. If the objection decision is wholly favourable to the taxpayer, any primary tax paid is refunded to the taxpayer together with interest.

In 2023–24, $2.76 billion in total liabilities were raised and $533 million was not disputed and paid. The balance of $2.22 billion is disputed, and $1.09 billion of this disputed amount was also paid upfront under 50:50 arrangements in the same year.

Review of audit decisions

Where taxpayers don't agree with the outcomes of their audit, they can request a review or object.

Independent review

Large businesses may request an independent review of proposed audit adjustments if they meet certain eligibility criteria (see ATO Large Market IR Guidelines). These reviews occur before an audit assessment is issued. There is no legal right to an independent review pre-assessment. Independent reviews are conducted by our Objections and review branch.

The independent review service is generally not offered for audit matters that relate to transfer mispricing or which involve the application of general anti-avoidance rules.

In 2023–24 for public and multinational businesses, only 2 matters proceeded to independent review. One application was withdrawn during the independent review, and one matter was still in progress at the end of the year.

The low number of independent reviews in part reflects that many audits involve transfer pricing or the application of the anti-avoidance provisions and are therefore not eligible for this process. Some matters may also be ineligible if they are considered through other processes, such as the General Anti-Avoidance Panel.

Objections

Generally, taxpayers have the legal right to object to some decisions we make. This includes, for example, amended assessments we issue following an audit or private binding ruling decisions. Alternatively, a taxpayer may object against their own self-assessment, seeking a review into lodged tax returns (referred to as self-objections).

Objections lodged

In 2023–24, 171 new objections were lodged by public and multinational businesses. Out of the 171 new objections lodged, 92 were objections to ATO decisions and 79 were self-objections.

Of the 92 objections to ATO decisions, 24 of these related to objections against amended assessments issued through audits by Public Groups. Some of these objections related to audit assessments issued in 2022–2023. Other significant categories of objections included:

• penalties (29)
• audit related assessments issued by other business lines (15)
• private ruling decisions (8).

The following table shows the total liabilities in dispute for assessments issued in the past 3 years that are still in dispute, and the number of cases subject to objection or litigation as at 1 July 2024.

We expect the number of objections related to assessments issued in 2023–24 to increase as some taxpayers had not yet lodged their objection by 30 June 2024 but are expected to (these taxpayers may already have entered into a 50:50 payment arrangement). Some taxpayers may also have multiple objections in progress at any one time.

Table 3: Remaining tax in dispute for assessments issued from 2021–22 to 2023–24 (as at 30 June 2024)

Year audit assessment issued	Number of matters in objection	Number of matters in litigation	Tax in dispute as at 30 June 2024
2023–24	14	0	$2.22 billion
2022–23	17Footnote2	0	$1.58 billion
2021–22	12	2	$1.91 billion

Objections for disputes involving public and multinational businesses can often take years to determine. This is partly due to the factual and legal complexity of the matters. Some matters will also be put on hold pending other processes such as the mutual agreement procedure under double tax treaties.

Taxpayers are legally able to and typically do provide substantial additional information as part of the objection process. Similarly, we may seek additional information through this process. New information can impact the outcomes reached at audit. We continue to encourage taxpayers to provide all relevant information as part of the audit process to ensure that this can be considered and factored into our position as early as possible.

Objections resolved

In 2023–24, 82 objections to ATO decisions for public and multinational businesses were determined. Of the objections to ATO decisions that were resolved, around 44% involved income tax issues, 20% GST and 29% penalties.

Of the 82 objections, 18 were in respect of investigations conducted through the Public Groups compliance programs. Of these 18, 9 were determined either wholly or partly in favour of the ATO, while 2 were determined in favour of the taxpayer. The balance of 7 were either found to be invalid or withdrawn for various reasons including settlement.

These statistics suggest that the decision of the audit team is being at least partly upheld in most cases either through final resolution as part of a settlement or determination of the objection itself.

Dispute resolution

Settlements and litigation are both important components of our dispute resolution strategy. We look to settle disputes where appropriate, alternatively we pursue other matters in court.

Settling disputes with large businesses

Settlements contribute to a well-functioning tax system, providing overall fairness and the best use of our resources. Settlements secure revenue that may otherwise be at risk or difficult to pursue due to time and cost.

Our approach to settlements with public and multinational businesses

We only settle disputes when it is appropriate to do so. We are guided by the ATO's Code of Settlement and our obligations under the Legal Services DirectionsExternal Link, including the obligation to act as a ‘model litigant’.

When deciding whether to settle disputes, we weigh up litigation prospects, the cost of the dispute continuing and the overall value for the Australian community. We may engage experts and senior legal counsel to assist in determining the prospects of success and whether settlement is appropriate. See Managing disputes with large corporate groups.

Settlement statistics for public and multinational businesses 2023–24

In 2023–24, we settled 29 separate cases with 67 public and multinational businesses. This includes settlements across all parts of the ATO not just Public Groups.

It is common for disputes with public and multinational businesses to involve several legal entities within an economic group. As a result, settlements will typically have multiple counterparties as signatories to the settlement deed.

These 67 parties to settlement agreements accounted for more than 20% of parties to settlements across all client groups and around 92% of the total tax revenue secured.

Settlements with public and multinational businesses secured around $1.8 billion of tax revenue. This is consistent with the 5-year average. Given the size and differences in disputes, there can be volatility in amounts. However, the 5 year average suggests that we are securing approximately $1.8 billion each year via settlements with public and multinational businesses.

Figure 1. Five-year trends for tax revenue secured from settlements with public and multinational businesses

Where relevant our settlements also secure outcomes for future periods. This means that in addition to resolving past years, we can achieve future behavioural change and increased tax collections through the settlement process. This creates greater certainty for the tax system and government revenues. More than 75% of all public and multinational business settlements in 2023–24 included future-year obligations.

Types of issues settled

In 2023–24, income tax was the predominant revenue type settled which accounted for around 96% of all settlements with public and multinational businesses. GST and other miscellaneous issues represented the balance of settlements.

Around 65% of cases involved global profit shifting risks. This is consistent with the proportion of these cases we observe in the audit program.

Global profit shifting cases are typically highly fact-dependent in nature, potentially involving the consideration of complex valuation, pricing and economic issues. Further, there may be considerable risk in litigating these cases, so settlement may sometimes be a desirable resolution pathway for both parties. The ability to 'lock in' future satisfactory pricing (rather than potentially having to re-audit and then re-litigate) is also a strongly desirable feature.

In appropriate cases we will seek judicial guidance to obtain law clarification. Where this risk is systemic in nature spanning multiple years, for example related party loans, we will only settle these cases if the taxpayer agrees to changes in their tax behaviours moving forward.

Stage at which matters settle

Settlement can occur at any stage, including before an audit commences, during an audit, objection or litigation. However, we will not settle a case until we have sufficient information to understand the facts and issues.

In 2023–24, around 78% of all public and multinational business settlements occurred before or during an audit. A further 9% of settlements occurred during an objection and 13% at the litigation stage.

Settlement variance

Settlement variance reflects the amount that we have conceded in reaching settlement as compared with our starting position.

In 2023–24, our total settlement variance for public and multinational businesses was 31%. This means we secured 69% of the disputed amount that we considered payable under our starting position.

Given that the size of some public and multinational business disputes (and therefore settlements) can be particularly significant, the settlement variance may move sharply from year to year. Our 5 year average of settlement variance is around 39% (that is, on average around 61% of revenue is secured). This is broadly consistent with (or even slightly lower than) the average variance in other client segments.

Figure 2. Five-year trends for public and multinational business settlement tax variance

The nature and extent of adjustments made in our settlements depend on the facts and legal issues in dispute. The variance from our starting position does not necessarily represent an amount that would have been collected had the dispute continued. For example, the taxpayer may provide further and better evidence to support their position over time.

Rigorous processes are in place when we decide our settlement positions. When deciding our settlement position, we will consider advice by legal counsel and experts, as well as the surrounding circumstances of each case.

For our significant settlements, our decision-making process is considered in an independent review by a former federal court judge when assessing whether a significant settlement was fair and reasonable as outlined below, see Independent assurance of settlement outcomes.

Ensuring compliance for the future

To create certainty for both ourselves and the taxpayer, our settlements will often secure future tax outcomes by setting the basis on which a taxpayer will lodge in future years.

Where a settlement provides for ongoing or future treatment of an arrangement, we monitor subsequent tax return lodgments to ensure compliance with the terms of the settlement.

Taxpayers are required to disclose annually via the reportable tax position (RTP) schedule whether they have complied with the terms of a settlement agreement in place for the year and whether there have been changes in the relevant and material facts on which the settlement was based. We provide information on the aggregated disclosures made by large public and multinational businesses through Category C of the RTP in our RTP Findings Report.

During 2023–24, there were 3 disclosures made in relation to material changes to settlement positions. We engaged with each taxpayer and confirmed all are taking active steps to ensure compliance with the terms of the settlement deeds or future compliance arrangement. See RTP Findings Report.

We may also verify compliance with settlement terms as part of our engagement with our Top 100 taxpayers, Top 1000 taxpayers through the Justified Trust program or as part of a specific engagement.

Transparency and settlements

We are committed to being transparent about our approach to collecting revenue and delivering results for the Australian community. The details of specific settlements are covered by confidentiality provisions and the tax secrecy requirements of the taxation law.

Recognising the public interest in significant matters, we encourage large businesses to publicly disclose when they enter settlements with us, and in particularly sensitive cases may require a public disclosure as part of the settlement agreement. In some cases, we will also issue a media statement following a public disclosure of a settlement.

Sharing settlements with other jurisdictions

International Exchange of Information (EOI) is the key mechanism used to share taxpayer-related information between Australia and other jurisdictions to administer and enforce Australia's tax laws. Settlement information may be exchanged with our treaty partners where they are relevant to the administration and enforcement of each other's domestic tax laws.

External scrutiny of our settlement decisions

Our settlement practices have been subject to external scrutiny by the Australian National Audit Office (ANAO), see The Australian Taxation Office’s Use of SettlementsExternal Link. The ANAO found that our practices are effective, and that settlements have been entered into, negotiated and followed up in line with our settlement policies and procedures, including the principles outlined in the ATO's Code of Settlement.

The ANAO found, when compared to other national revenue authorities, that we provide the highest level of public reporting around settlement activities. Since then, we have further increased our reporting and transparency.

Independent assurance of settlement outcomes

Under our Independent Assurance of Settlements (IAS) Program, we engage a former federal court judge to independently assure our largest and most significant settlements. The former federal court judge will assess whether the settlement is fair and reasonable for the Australian community.

Settlements satisfying the following criteria will be subject to assurance by a former federal court judge:

• where a pre-settlement starting position is greater than $50 million
• a settlement amount greater than $20 million, or
• the settlement variance is greater than $20 million.

Deputy commissioners can also refer a settlement for review under this program, even if it does not meet the standard materiality criteria. Examples of where this has occurred include, where there is likely to be public interest in the settlement, a former ATO assistant or deputy commissioner is representing the taxpayer in the settlement process, or the settlement is the first dealing with particular matters and we want to test our approach.

Outcomes from the IAS program are reported in our annual report. During 2023–24, 13 settlements with public and multinational businesses were independently reviewed under our IAS Program. All 13 settlements were found to be a fair and reasonable outcome for the Australian community.

As independent assurers review settlements only after they have been finalised, they may not be reviewed in the same income tax year in which they were settled. We expect 13 settlements with public and multinational businesses to be reviewed in 2024–25 which related to settlements in prior years.

Public and multinational business litigation

Litigation is an important part of our dispute resolution strategy and we aim to have appropriate matters pursued in court. Typically, this will be where it is appropriate to clarify the operation of the law, where we want to send a strong signal about unacceptable behaviours (such as tax avoidance) or where there are significant intractable disputes.

In recent years, we have pursued important international tax issues in court, including related party financing, marketing hub and embedded royalty arrangements. The courts have provided important judicial precedent for example, Chevron v Commissioner and Singtel v Commissioner, both of which were found in favour of the ATO. However, we don't succeed in every matter, such as in Glencore v Commissioner and Mylan v Commissioner.

Table 4: Significant litigation cases handed down in 2023–24

Matter	Issues	Outcome
Singtel v Federal Commissioner for Taxation [2024] FCAFC 29	Related party financing and transfer mispricing.	A favourable case for the Commissioner at the Full Federal Court. The High Court denied SingTel special leave to appeal.
PepsiCo, Inc. v Commissioner of Taxation [2024] FCAFC 86	Embedded royalties and withholding tax avoidance, and diverted profits tax.	An unfavourable outcome for the Commissioner at the Full Federal Court. The Commissioner has applied for special leave to appeal to the High Court.
Mylan Australia Holding Pty Ltd v Commissioner of Taxation (Commissioner) (No 2) [2024] FCA 253	Restructure and push down of debt into Australia and tax avoidance.	An unfavourable outcome for the Commissioner.

In 2023–24, all litigation outcomes (IT, GST, FBT and PRRT) involving public and multinational businesses were favourable 53% of the time and unfavourable 47% of the time. Of these outcomes, 74% were related to income tax issues with nearly 80% of those dealings involving profit shifting related issues.

For income tax decisions, 50% of the decisions were favourable and 50% unfavourable.

We carefully consider all litigation outcomes and adjust our compliance approach and guidance to reflect the courts’ decisions and interpretation of the law. To further guide large business, we issue decision impact statements to ensure taxpayers understand our view of the decision.

Mutual agreement procedure

Australia's network of double taxation treaties provides taxpayers with a right to request a mutual agreement procedure (MAP) if they consider that they are not being taxed in accordance with a tax treaty.

Where we take action in relation to cross-border dealings, for example raising an amended assessment, this may give rise to the taxpayer being assessed on the same income, profit or gain twice – once in Australia, and once in the other jurisdiction. In practice, the taxation of the amount included in the other jurisdiction may be at much lower rates than Australian corporate rates, so is unlikely to result in total tax being double that payable in Australia.

Nonetheless, if there is a tax treaty between Australia and the other jurisdiction, the taxpayer may request a MAP to relieve taxation caused by double inclusion. We will also receive MAP applications generated from compliance activities of treaty partner jurisdictions (known as inbound MAPs).

Under a MAP, Competent Authorities (CA) of the relevant jurisdictions engage to resolve the treaty issues and double taxation. In most cases we can reach agreement with the other jurisdiction to resolve the MAP. The taxpayer is not involved in these negotiations and is not legally bound by them, although in practice will usually observe the outcome of the negotiations, particularly where both countries have comparable corporate tax rates.

Some treaties provide taxpayers with the ability to request mandatory arbitration, if an agreement has not been reached by the jurisdictions in the specified time period (usually 2 years). If this occurs, the jurisdictions will be required to progress to arbitration. To date, Australia has not participated in any mandatory arbitration processes. We anticipate a similar practical challenge with mandatory arbitration, in that the resolution is not necessarily binding on the taxpayer.

As at 30 June 2024, we had 24 open MAPs arising from ATO Public group audit activities. During 2023–24, we received 8 new MAP requests resulting from ATO audits. During the year we concluded 6 MAPs (all commenced in prior years) related to ATO disputes (in most cases closed due to a relevant Australian court decision). More commonly agreement is reached, and Australia has received several awards from the OECD for the management of the overall MAP program across multiple taxpayer segments.

Common issues of these MAPs reflect issues in the audit program, that is, intangibles migration, inbound distribution and commodity exports.

For the avoidance of doubt, we note that this data does not include MAP requests received as a result of other jurisdictions' compliance activities or requests not arising from compliance actions (for example, requests for residency determination).

The following table shows details of concluded MAPs (15 in total) following ATO audit actions and treaty counterparts.

Table 5: Concluded outbound MAP cases for financial years 2022 to 2024

Financial year	Closed cases	Primary Issue	Countries
2022	2	Transfer pricing	France Singapore
2023	7	Transfer pricing	Germany India Ireland Japan Singapore
2024	6	Transfer pricing, royalties	China India

1. Note: all audit related data reflects compliance activity conducted by the Public groups business line. Public groups is the business line responsible for compliance of public and multinational businesses. Occasionally some other business lines may conduct audits relating to entities classified as public and multinational businesses. These tend to be small in number and materiality. Data in relation to other business lines has not been included in this report.

2. This relates to 15 taxpayers.