Non-lodgment of international dealings schedule
We focus on entities that fail to lodge the international dealing schedule (IDS) where tax returns and other information indicate that the IDS may be required but has not been lodged.
You are required to complete an IDS and lodge it with your income tax return for that year, if:
- the aggregate amount of the transactions or dealings with international related parties (including the value of property transferred or the balance outstanding on any loans) greater than $2 million
- you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust
- the thin capitalisation provisions affect you, or
- any other requirement set out in the income tax return.
The IDS forms part of the entity's tax return. Not lodging an IDS where required may result in the tax return being considered as incomplete and failure to lodge on time penalty may apply.
The International dealings schedule instructions 2024 will help you complete the International dealings schedule 2024 (PDF 2.2MB, NAT 73345)This link will download a file. Instructions and forms for earlier years can be found on Forms and instructions.
Residency
Our focus
Entities that fail to declare as a tax resident where Australian tax residence tests are satisfied attract our attention. We also focus on entities that shift tax residency to another jurisdiction in conjunction with restructures, asset disposals or a significant increase in worldwide income.
Residency status
Residency is a foundation on which the Australian tax system determines how an individual or an entity will be taxed. An Australian tax resident is assessable on their worldwide income derived from all sources. However, a non-resident is only taxed on their Australian sourced income.
The tax residency status of individuals is explained at Your tax residency and in TR 2023/1 Income tax: residency tests for individuals.
The tax residency status of business entities such as companies, corporate limited partnerships and trusts is explained at Working out your residency.
If a company carries on business and has its central management and control in Australia, it will carry on business in Australia within the meaning of the central management and control test of residency. For more information see TR 2018/5 Income tax: central management and control test of residency. Practical Compliance Guideline PCG 2018/9 Central management and control test of residency: identifying where a company's central management and control is located provides practical guidance, including a risk assessment framework, to help foreign-incorporated companies determine their residency position.
Incorrect assessment of tax residency attracts our attention.
Change in tax residency
We focus on wealthy individuals who change their Australian residency status commensurate with a significant income event occurring in their personal lives or in relation to their family group.
We also focus on individuals, companies and trusts shifting their tax residency to another jurisdiction before or during restructures or asset disposals within their family group with the aim of:
- affecting the location of central management and control through artificial or contrived arrangements
- avoiding an Australian tax liability
- obtaining tax benefits on the disposal of CGT assets
- making tax-free distributions to associates.
Other situations that attract our attention include when tax has not been paid on:
- an entity's assets when ceasing to be an Australian resident
- a resident entity's worldwide income.