In some circumstances you may qualify for an exemption from some or all of your CBC reporting obligations.
Applying for an exemption
We provide exemptions in 3 ways:
- administrative relief, without the need to request an exemption
- fast-track exemption
- exemption on formal request.
The circumstances where administrative relief is available are described in the sections Administrative relief – CBC report to Dormant entities of this guidance. If you qualify, we will apply the relief to you using the information you have lodged or will lodge with us.
A fast-track exemption is available if you meet specified conditions and you send an email to CBCreporting@ato.gov.au confirming that you meet those conditions. We will acknowledge your exemption by email reply.
Alternatively, if your circumstances do not qualify for administrative relief or a fast-track exemption, you may lodge a formal exemption request setting out your grounds for believing that an exemption is warranted. You or your authorised representative may request an exemption from some or all of your obligations by emailing your request to CBCreporting@ato.gov.au.
If you are not the authorised representative of an entity with a CBC reporting lodgment obligation, you will need to provide a letter of authority from the entity to request an exemption on its behalf.
A request for exemption should set out the facts and circumstances relevant to your CBC reporting obligations, including:
- the statements from which you seek exemption (that is, one or more of the CBC report, master file and local file)
- the reporting periods for which you seek exemption
- the names and TFNs or ABNs of the entity or entities for which you seek an exemption
- the name of your CBC reporting parent and the country in which it is a tax resident
- your reasons for seeking an exemption.
If you are the head company of a tax consolidated or MEC group, your request will be taken to cover the tax consolidated or MEC group. If you are requesting an exemption on behalf of entities outside the tax consolidated or MEC group (entities that are members of the same group of entities consolidated for accounting purposes), you should identify those entities in your request. You must have authorisation to act on their behalf.
|
Note: If you self-assess, it must be factually based. We recommend you: • document how you met the exemption criteria • reference the relevant source materials to support your analysis and conclusions. If you request a formal or fast-track exemption, ensure that your representations of facts and circumstances are consistent with the disclosures in the associated tax returns and financial statements. We may ask for substantiating materials to support the points made in the exemption request. We will apply an evidence-based approach in reviewing and approving requests. |
Fast-track exemption
Fast-track exemptions for one or more CBC statements are available in certain scenarios. You can self-assess your eligibility and advise us by email that you meet the conditions required for the exemption.
|
Type of scenario |
Exemption available |
Exemption period |
|---|---|---|
|
CBC report and master file |
Up to 3 years |
|
Local file |
Up to 3 years |
|
CBC report |
One year |
|
Master file |
One year |
|
CBC report and master file |
One year |
|
CBC report |
Up to 3 years |
Note: if you are an Australian resident company, we automatically apply an exemption from lodging a local file if you declare in your tax return that you have no transactions or dealings with international related parties for the reporting year. |
Local file |
One year |
If you qualify for a fast-track exemption because of a scenario above, you can send an email to CBCreporting@ato.gov.au. Your email should:
- identify the relevant scenario
- identify the income year (or years) and the entity (or entities) to be covered by the exemption
- confirm that the conditions are met
- include 'Fast-track exemption' in the email subject.
We will acknowledge your exemption by reply email.
Formal exemption
Find out about:
Lodging a formal exemption request
We recommend that you make an exemption request as early as possible to allow us to consider it and notify you of our decision before the statutory due date for lodging your CBC reporting statements.
If you make a formal exemption request close to the statutory due date, you may also need to make a request for an extension of time to lodge. You can combine these requests.
We aim to decide on your formal exemption request within 28 days of receiving all the relevant information from you.
Exemption considerations
We decide on each exemption request based on your facts and circumstances and the purpose of CBC reporting. Before doing so, we may request further information. We set out below the circumstances that may be relevant to considering an exemption from lodging a particular CBC reporting statement. These circumstances are not exhaustive.
If you are a CBC reporting parent, circumstances that may be relevant to an exemption from lodging a CBC report include:
- whether any member of your group consolidated for accounting purposes is a foreign resident, or carries on business through a permanent establishment in a foreign jurisdiction
- whether one or more foreign jurisdictions may expect automatic exchange of the CBC report by Australia
- whether there are any cross-border dealings between constituent entities of your group.
If you are not a CBC reporting parent, the circumstances that may be relevant to an exemption from lodging a CBC report include:
- whether any other entity in your global accounting group has an obligation to file a CBC report outside of Australia
- whether voluntary filing of a CBC report in another jurisdiction is available to your CBC reporting parent or another foreign entity in your global accounting group
- the materiality of the business operations in Australia in terms of transfer pricing risk or other BEPS-related risks for Australia
- any transitional circumstances arising from delays in the implementation of CBC reporting in other jurisdictions.
Circumstances that may be relevant to an exemption from lodging a master file might include:
- whether any member of your group consolidated for accounting purposes is a foreign resident, or carries on business through a permanent establishment in a foreign jurisdiction
- whether any other entity in your global accounting group has been or will be required to prepare or file the master file outside of Australia
- any transitional circumstances arising from delays in the implementation of CBC reporting in other jurisdictions
- the materiality of the business operations in Australia in terms of its transfer pricing risk or other BEPS related risks for Australia.
Circumstances that may be relevant to an exemption from lodging a local file include:
- you have no international related party dealings (IRPDs)
- whether you have IRPDs with entities in the specified countries listed in the International dealings schedule (IDS) instructions for the income year that most closely corresponds to the relevant reporting periods
- whether you are currently subject to a risk review or audit (an active compliance product relevant to transfer pricing risk or other BEPS related risks)
- the materiality of the business operations in Australia in terms of its transfer pricing risk or other BEPS-related risks for Australia.
Exemption scope
If an exemption is granted, the notice will outline which statements you are exempt from providing and the reporting periods the exemption applies to.
If the circumstances relevant to an exemption are not expected to change in the foreseeable future, an exemption may be given for up to 3 reporting periods. You may seek to extend an exemption if appropriate.
Exemptions provided for transitional reasons, such as delays in the implementation of CBC reporting in another jurisdiction, will usually be granted for one year. A further period of exemption may be considered in limited circumstances.
Changes in circumstances
Exemptions are granted on the condition that you will notify us in a timely manner of any material changes in the facts and circumstances outlined in your exemption request by emailing CBCreporting@ato.gov.au. You should also notify us of any other changes to your facts and circumstances that may affect your exemption.
Examples of where you may need to advise us of changes to your facts and circumstances include:
- you subsequently acquire a foreign resident entity who then becomes a member of your CBC reporting group
- you no longer engage in IRPDs, or you commence having IRPDs, or you significantly increase your IRPDs.
Review rights
If you are dissatisfied with our exemption decision, you can seek to have it reconsidered by emailing CBCreporting@ato.gov.au.
A CBC reporting exemption decision is not a 'reviewable objection decision'. This means you do not have the right to lodge an objection with us or have the decision reviewed by the Administrative Review Tribunal.
You may apply for a review by the Federal Court under the Administrative Decisions (Judicial Review) Act 1977. Any applications to the Federal CourtExternal Link will need to be lodged within 28 days of the date of the decision issued to you.
Administrative relief – CBC report
There are 2 scenarios where you may qualify for administrative relief from filing a CBC report. These concessions are designed to align domestic CBC report filing obligations with the OECD model.
We will not seek the CBC report from you if your CBC reporting parent is resident for tax purposes in a foreign jurisdiction and one or more of the following applies:
- your CBC reporting parent is under an obligation to file a CBC report in their jurisdiction of tax residence and Australia has an active CBC exchange agreement with that jurisdiction
- your CBC reporting parent or another entity in your global accounting group (a 'surrogate parent entity') voluntarily files a CBC report in its jurisdiction of tax residence for exchange under an active CBC exchange agreement with Australia.
If you are relying on a filing by a surrogate parent entity you should confirm with that entity that it has filed in that capacity.
When you provide your local file or master file, you may provide the name of your CBC reporting parent and the jurisdiction in which they are a tax resident. You will be able to state whether that entity or another entity in the accounting group has lodged (or will lodge) a CBC report on your behalf. You will also indicate their jurisdiction of tax residence. This information is taken as notification of your intention to use the administrative relief described in this section.
Administrative relief – local file
If you are an Australian resident company that was a CBC reporting entity for the whole or a part of the previous income year and you declare in your tax return that you have no transactions or dealings with international related parties for the reporting year, we will not seek a full local file or a short form local file from you for that period.
For the 2017 income year onwards, this is only available in the company tax return and is evidenced by answering No at Question 26. You will still need to consider your lodgment obligations with respect to the CBC report and master file.
Tax exempt entities under Division 50
If you are a CBC reporting entity and a tax-exempt entity under Division 50 of the ITAA 1997 (a 'Division 50 entity'), we will not seek CBC reporting statements from you. This relief applies automatically, no separate exemption request is required.
This relief also applies to you if you are a taxable entity that is a wholly owned subsidiary of a Division 50 entity. You will need to identify the Division 50 entity in your tax return as your ultimate holding company (UHC) to access this relief.
There is one exception to this concession. If you are the CBC reporting parent and you have a foreign constituent entity or foreign permanent establishment, you will need to lodge a CBC report. We will not, however, require that you lodge a master file or local file.
National Tax Equivalent Regime
If you are a CBC reporting entity and a National Tax Equivalent Regime (NTER) entity, or a wholly owned subsidiary of such an NTER entity, you will generally not be required to lodge CBC reporting statements. We will apply this treatment automatically.
There is one exception to this concession. If you are the CBC reporting parent entity and you have a foreign constituent entity or foreign permanent establishment, you will need to lodge a CBC report. A master file or local file will not be required.
Dormant entities
If you are a dormant entity for the reporting period and a CBC reporting entity for the whole or part of the previous income year, we will not seek CBC reporting statements from you (the CBC report, master file, local file) if you:
- are the only Australian presence (entity or PE) of your global group
- are not the ultimate parent entity of the global group
- have notified us that no tax return is required for the income year.
If you are a dormant entity and your global group does have another Australian presence (entity or PE) with CBC reporting obligations, the standard administrative relief which considers the filing of statements by other entities will apply to your obligations. You will not be required to file a local file if you have notified us that no tax return is required for the income year.
Ceasing operations or winding up
If an entity with a foreign CBC reporting parent was a CBC reporting entity for the whole or a part of the previous income year and it is wound up in the current income year, or if the Australian presence was a PE and it ceased to be a PE during the current income year, a final tax return for the period of its existence may still be required. While this final return would reflect activities for a period less than 12 months the tax return is nevertheless for a full income year and CBC reporting statements are still required for that income year.
The winding up of an entity or cessation of an Australian presence will not, on its own, be considered grounds for a CBC reporting exemption. However, the administrative relief provided above in relation to dormant entities or companies with no IRPDs may apply to you. Alternatively, we may consider an exemption request from lodging one or more CBC reporting statements favourably if the business activities or transfer pricing risks during the year are immaterial.
If none of the administrative relief applies to you and an exemption is not granted, you will need to arrange to file the required CBC reporting statements.
CBC reporting statements will not be required for income years after an entity has been wound up or, in the case of a foreign resident operating through a PE, for income years after an entity ceased to operate in Australia.
Difficulties in accessing information
We expect foreign parent entities to support local entities to meet all of their local legal requirements, including their tax and associated reporting obligations. If you experience genuine difficulties in obtaining information or reports from your CBC reporting parent or another entity in your multinational enterprise (MNE) group, such that you will have difficulties meeting your CBC reporting lodgment obligations, you can outline your circumstances to us by emailing CBCreporting@ato.gov.au.
In doing so, you will need to fully describe the difficulties you're encountering in accessing the information. We will consider how you can best meet your obligations, including whether your circumstances support an extension of time to lodge a CBC reporting statement or a temporary exemption.