Appendices

Appendix 1: Transaction categories

Table 58: IRPDs in tangible property of a revenue nature

Code	Value
TPRN	Tangible property of a revenue nature

Table 59: IRPD service arrangements

Code	Value
TRS	Treasury-related services
MAS	Management and administration services
INSERV	Insurance services
REINSERV	Reinsurance services
RD	Research and development services
SAM	Sales and marketing services
SITS	Software and IT services
TS	Technical services
LS	Logistics services
AM	Asset management services
OS	Other services

Table 60: IRPD use rights

Code	Value
RUIP	Rights to use IP
ORSR	Other rights to use, supply or receive where consideration is royalty under section 6(1) of the ITAA 1936
LF	Licence fees
RRP	Rent of real property
HLPE	Hire or lease of plant or equipment
LHORP	Lease or hire of other property or rights

Table 61: IRPD share-based employment remuneration

Code	Value
SBER	Share based employment remuneration

Table 62: Other revenue (non-financial) IRPDs

Code	Value
CCA	Cost contribution arrangement
ORIRPD	Other revenue IRPDs

Table 63: IRPD derivative transactions

Code	Value
CCIRS	Cross currency interest rate swap
CDCSFFO	Currency derivative (not cross currency interest rate swap), including currency swap, forward, future or option
FFIRS	Fixed for floating interest rate swap (not cross currency)
OIRD	Other interest rate derivative (not cross currency)
CDS	Credit default swap
AS	Asset swap
CDCS	Commodity derivative, including commodity swap, forward, future or option
OD	Other derivative

Table 64: IRPD debt interests (including ordinary loans and borrowings)

Code	Value
OBL	Ordinary borrowings / loans (excluding trade financing)
TFIN	Trade financing
BND	Bonds
PNOT	Promissory notes
CNTDI	Convertible notes that are debt Interests
CSTDI	Convertible shares that are debt Interests
RPSDI	Redeemable preference shares that are debt Interests
OKDI	Other kinds of debt Interests

Table 65: IRPD debt factoring or debt securitisation

Code	Value
IDF	Inward debt factoring
ODF	Outward debt factoring
IDSEC	Inward debt securitisation
ODSEC	Outward debt securitisation

Table 66: Other kinds of IRPDs of a financial nature

Code	Value
GILDI	Guarantee or indemnity of liability under debt Interest
GIOKL	Guarantee or indemnity of other kind of liability
IN	Insurance
REIN	Reinsurance
OFD	Other financial dealings

Table 67: IRPDs involving disposal or acquisition of tangible property of a non-revenue (capital) nature

Code	Value
RPRT	Real property
PLEQ	Plant or equipment
OTPRTY	Other tangible property

Table 68: IRPDs involving disposal or acquisition of intangible property or rights of a non-revenue (capital) nature

Code	Value
ASIP	Assignment of IP
IOSH	Issue of ordinary shares
AOSH	Assignment of ordinary shares
IEIOOS	Issue of equity interest other than ordinary shares
AQIOS	Assignment of equity interest other than ordinary Shares
ASSD	Assignment of debts
ASSL	Assignment of liabilities
ASSBC	Assignment of benefit of contracts (excluding assignment of equity interests, debts or IP)
ASSOPR	Assignment of other intangible property or rights

Table 69: Foreign Exchange IRPDs

Code	Value
FCDSTTS	Foreign currency deferred payment arrangement for sale of Tangible Trading Stock
FCDPTTS	Foreign currency deferred payment arrangement for purchase of Tangible Trading Stock
FCDAPS	Foreign currency deferred payment arrangement for provision of Services
FCDAAS	Foreign currency deferred payment arrangement for acquisition of Services
FCDRRP	Foreign currency deferred payment arrangement for rent of real property to IRP
FCDRRPI	Foreign currency deferred payment arrangement for rent of real property from IRP
FCDHLP	Foreign currency deferred payment arrangement for hire or lease of plant or equipment to IRP
FCDHLPE	Foreign currency deferred payment arrangement for hire or lease of plant or equipment from IRP
FCDSBER	Foreign currency deferred payment arrangement for share based employment recharge to IRP
FCDSBERI	Foreign currency deferred payment arrangement for share based employment recharge from IRP

Appendix 2: Exclusions list

Table 70: Exclusions list

Code	Exclusions list
STPRKIGS	Simplified Transfer Pricing Record Keeping (Intra-Group Services)
STPRKMAS	Simplified Transfer Pricing Record Keeping (Management & Administration Services)
STPRKTS	Simplified Transfer Pricing Record Keeping (Technical Services)
STPRKLLI	Simplified Transfer Pricing Record Keeping (Low Level Loans)
STPRKLLO	Simplified Transfer Pricing Record Keeping (Low Level Loans – Outbound)
RUESA	Reimbursement under employee secondment agreements
LVLRSA	Low value / low risk service agreements
LVLRSPT	Low value / low risk sale and purchase tangible trading stock agreements
IOS	Issue of ordinary shares

Appendix 3: TP methods / CAP methods

Table 71: TP methods / CAP methods

Code	Value
APPC	Apportionment of costs
APPI	Apportionment of Income
CUP	Comparable uncontrolled price method
CCA	Cost-contribution arrangement
CP	Cost-plus method
FMUAC	Fixed mark-up applied to cost
FPRP	Fixed percentage of resale price
MC	Marginal costing
PS	Profit split method
RPM	Resale price method
TNM	Transactional net margin method
TNMW	Transactional net margin method (whole-of-entity)
OTH	Other arm's length methods
NON	None
UNKT	Unknown (transfer pricing method)
CPR	Cost Price
DVAL	Directors valuation
DCF	Discounted cash flow
IVAL	Independent valuation
NCON	Nil consideration
QMRP	Quoted market price
WDVAL	Written-down value
OM	Other methods
UNKC	Unknown (capital asset pricing method)

Appendix 4: TP documentation codes / STPRK options

Table 72: TP documentation codes / STPRK options

Code	Value
1	0%
2	1% to less than 25%
3	25% to less than 50%
4	50% to less than 75%
5	75% to less than 100%
6	100%
7	Simplified transfer pricing record keeping (materiality)
8	Simplified transfer pricing record keeping (small taxpayers)
9	Simplified transfer pricing record keeping (distributors)
10	Simplified transfer pricing record keeping (intra-group services)
11	Simplified transfer pricing record keeping (management & administration services)
12	Simplified transfer pricing record keeping (technical services)
13	Simplified transfer pricing record keeping (low level loans – inbound)
14	Simplified transfer pricing record keeping (low level loans – outbound)
15	Green Zone (PCG 2017/1)
16	Green Zone (PCG 2017/4)

Appendix 5: Accounting records / income tax records

Table 73: Accounting records / income tax records

Code	Transaction category	Accounting records / income tax records
TPRN	Tangible property of a revenue nature	Accounting records
RUIP	Rights to use IP	Income tax records
ORSR	Other rights to use, supply or receive where consideration is royalty under section 6(1) of the ITAA 1936	Income tax records
LF	Licence fees	Income tax records
RRP	Rent of real property	Accounting records
HLPE	Hire or lease of plant or equipment	Accounting records
LHORP	Lease or hire of other property or rights	Accounting records
TRS	Treasury related services	Accounting records
MAS	Management and administration services	Accounting records
INSERV	Insurance services	Accounting records
REINSERV	Reinsurance services	Accounting records
RD	Research and development services	Accounting records
SAM	Sales and marketing services	Accounting records
SITS	Software and IT services	Accounting records
TS	Technical services	Accounting records
LS	Logistics services	Accounting records
AM	Asset management services	Accounting records
OS	Other services	Accounting records
CCIRS	Cross currency interest rate swap	Accounting records
CSCSFFO	Currency derivative (not cross currency interest rate swap), including currency swap, forward, future or option	Accounting records
FFIRS	Fixed for floating interest rate swap (not cross currency)	Accounting records
OIRD	Other interest rate derivative (not cross currency)	Accounting records
CDS	Credit default swap	Accounting records
AS	Asset swap	Accounting records
CDCS	Commodity derivative, including commodity swap, forward, future or option	Accounting records
OD	Other derivative	Accounting records
IDF	Inward debt factoring	Accounting records
ODF	Outward debt factoring	Accounting records
IDSEC	Inward debt securitisation	Accounting records
ODSEC	Outward debt securitisation	Accounting records
OBL	Ordinary borrowings/loans (excluding trade financing)	Accounting records
TFIN	Trade financing	Accounting records
BND	Bonds	Accounting records
PNOT	Promissory notes	Accounting records
CNTDI	Convertible notes that are debt interests	Accounting records
CSTDI	Convertible shares that are debt interests	Accounting records
RPSDI	Redeemable preference shares that are debt interests	Accounting records
OKDI	Other kinds of debt interests	Accounting records
GILDI	Guarantee or indemnity of liability under a debt interest	Accounting records
GIOKL	Guarantee or indemnity of other kind of liability	Accounting records
IN	Insurance	Accounting records
REIN	Reinsurance	Accounting records
OFD	Other financial dealings	Accounting records
ORIRPD	Other revenue IRPDs	Accounting records
RPRT	Real property	Accounting records
PLEQ	Plant or equipment	Accounting records
OTPRTY	Other tangible property	Accounting records
ASIP	Assignment of IP	Accounting records
IOSH	Issue of ordinary shares	Accounting records
AOSH	Assignment of ordinary shares	Accounting records
IEIOOS	Issue of equity interest other than ordinary shares	Accounting records
AQIOS	Assignment of equity interest other than ordinary shares	Accounting records
ASSD	Assignment of debts	Accounting records
ASSL	Assignment of liabilities	Accounting records
ASSBC	Assignment of benefit of contracts (excluding assignment of equity interests, debts or IP)	Accounting records
ASSOPR	Assignment of other intangible property or rights	Accounting records
SBER	Share based employment remuneration	Income tax records
CCA	Cost contribution arrangement	Accounting records

Appendix 6: Assessable foreign exchange gains and deductible foreign exchange losses for Australian income tax

Subject to any applicable special reporting rules in Appendix 7, if the reporting entity has returned foreign exchange gains or deducted foreign exchange losses for its relevant IRP transaction/RAS for Australian income tax purposes, you need to show the amounts returned and deducted and the relevant foreign currency at Questions 28 to 31 in Part A of the local file for the relevant IRP transaction/RAS.

This may include foreign exchange gains the reporting entity has returned and foreign exchange losses it has deducted during the income year for trade-related financial liabilities or receivables which may potentially arise if the reporting entity did not pay the IRP, or was not paid by the IRP, when the price for goods or fees for services are payable.

Examples include:

• foreign currency intercompany liabilities for amounts payable by the reporting entity for purchase of commodities from international related parties which are satisfied during the income year
• foreign currency intercompany receivables for amounts payable to the reporting entity for provision of services to international related parties which are satisfied during the income year.

Assessable foreign exchange gains and deductible foreign exchange losses for income tax purposes are determined under Division 775 of the ITAA 1997 or, if applicable, under the taxation of financial arrangements (TOFA) provisions in Division 230 of the ITAA 1997.

For more guidance on entities covered by TOFA and the operation of TOFA, refer to Guide to the taxation of financial arrangements (TOFA).

In other scenarios assessable foreign exchange gains and deductible foreign exchange losses are determined under the provisions in Subdivisions 775-B to 775-E and Subdivisions 960-C and 960-D of the ITAA 1997.

Foreign exchange gain refers to a foreign exchange gain attributable to fluctuations in a currency exchange rate you make as a result of a forex realisation event under the provisions.

Foreign exchange loss refers to a foreign exchange loss attributable to fluctuations in a currency exchange rate you make as a result of a forex realisation event under the provisions.

Under Subdivision 775-B of the ITAA 1997 there are five main types of Forex realisation events:

• event 1 happens if you dispose of foreign currency, or a right to receive foreign currency, to another entity
• event 2 happens if you cease to have a right to receive foreign currency (other than because you disposed of the right to another entity)
• event 3 happens if you cease to have an obligation to receive foreign currency
• event 4 happens if you cease to have an obligation to pay foreign currency
• event 5 happens if you cease to have a right to pay foreign currency.

There are also special rules:

• under Subdivision 775-C of the ITAA 1997, for rollover for facility agreements and special rules for securities issued under the facility agreements
• under Subdivision 775-D of the ITAA 1997, providing an election to disregard forex realisation events 2 and 4 for qualifying forex accounts not exceeding $250,000
• under Subdivision 775-E of the ITAA 1997, providing a choice to use the retranslation method for qualifying forex accounts instead of forex realisation events 2 and 4.

For more information about foreign exchange gains and losses, see Foreign exchange gains and losses.

Appendix 7: Special rules for reporting foreign exchange gains and losses in Local File – Part A

For reporting entities that have made an election under Subdivision 960–D of the Income Tax Assessment Act 1997 (ITAA 1997) to adopt a functional currency for Australian tax purpose that is not Australian dollars, the reference to ‘foreign currency’ in these instructions may include Australian dollars.

Reporting FX gains and losses calculated using the financial reports method under TOFA

In the case of reporting entities that have elected the ‘financial reports’ method for their relevant IRPD financial arrangements under Subdivision 230-F of the ITAA 1997, for IRP financial arrangements where the FX gains and losses have been calculated using the financial reports method in Subdivision 230-F, there is no requirement to separately report any portion of the annual Division 230 gain or loss attributable to realised or unrealised FX gains/losses in Part A of the local file for the relevant transaction/RAS. The whole amount of the fair value movements or annual adjustments using the financial reports method under Division 230 (including any portion attributable to realised or unrealised FX gains/losses) is required to be reported for the relevant transaction/RAS as either:

• ‘Expenditure’ (of a non-capital nature) at Question 16 (LCMSF41)
• ‘Revenue’ (of a non-capital nature) at Question 17 (LCMSF42).

For the 2020 reporting period, report a zero value for the transaction/RAS at:

• Question 28 (LCMSF87) for FX losses deducted
• Question 30 (LCMSF43) for FX gains returned.

Reporting FX gain and losses for financial institutions

As an interim measure pending finalisation of permanent reporting rules for financial institutions that will be in place for the 2021 reporting year, the special interim rules developed for the 2018 reporting of financial institutions will remain for the 2020 reporting year.

FX gains and losses for transactions on capital account (financial institutions)

FX gains and losses for transactions on capital account for income tax purposes must be reported for the particular transaction/RAS you show at Part A as outlined in the specific local file instructions.

Where your accounting systems do not produce the amounts of the FX gains and losses for tax purposes for the particular transaction/RAS you show at Part A, you must make best efforts to determine and report the FX gains returned and the FX losses deducted for the transaction/RAS based on the values for the relevant foreign currency denominated liabilities or receivables in your accounting systems.

FX gains and losses for transactions on revenue account (financial institutions)

For FX gains and losses associated with transactions that are on revenue account for income tax purposes, the following approach can be taken:

• If your current accounting system outputs include the relevant FX gains and losses for the transaction/RAS as outlined in the local file instructions, show these for the transaction/RAS.
• If your current accounting system outputs only include the relevant FX gains and losses on an aggregated basis, make a best effort to report the FX gains or losses on an aggregated basis (including the Foreign Currency CodeExternal Link for the most substantive currency), per transaction type/RAS. This same aggregated amount would be reported at the labels for FX losses deducted (LCMSF87) or FX gains returned (LCMSF43) for every transaction/RAS included in calculating the aggregated FX gain or loss amount.
• If your current accounting system outputs only include the relevant FX gains and losses on an aggregated basis and you cannot reasonably determine or estimate the aggregated amount of the FX gains or losses per transaction type, show the aggregated amount of the FX gains or losses for all the relevant transaction types of a revenue nature (including the Foreign Currency CodeExternal Link for the most substantive currency). This aggregated amount would be reported at the labels for FX losses deducted (LCMSF87) or FX gains returned (LCMSF43) for every transaction/RAS included in calculating the aggregated FX gain or loss amount.

Reporting FX gains and losses for deferred foreign currency payment arrangements for certain qualifying transaction categories

A special reporting rule applies to IRPDs involving deferred foreign currency payment arrangements for the following kinds of local file Transaction categories:

• sale / purchase of tangible property of a revenue nature to / from the IRP
• provision / acquisition of services to / from the IRP
• IRP use rights granted to / from an IRP
• share based employment recharge to / from an IRP

Short term deferred foreign currency payment arrangements

• If the foreign currency deferred payment arrangements for the eligible IRP transaction/RAS do not involve payment or other satisfaction of the amounts payable under the arrangements more than 12 months after the date the amounts become due then the following codes are shown for the relevant IRP transaction/RAS:
• code indicating short term foreign currency deferred payment arrangements, and
• code indicating the relevant foreign currency.

There is no requirement to show the amount of FX gains returned or FX losses deducted for the relevant IRP transaction/RAS in Part A of the Local File.

If the foreign currency deferred payment arrangements are for RUIP, ORSR, LF or LHORP Transactions, you will not be able to answer Questions 25, 26 or 27 due to the design specifications for the 2020 local file. If you have short term foreign currency deferred payment arrangements for these types of transactions, you should show zero in the 2020 local file for:

• the amount of any foreign exchange losses deducted for the arrangements at Question 28 (LCMSF 87)
• the amount of any foreign exchange gains returned for the arrangements at Question 30 (LCMSF 43)

Longer term deferred foreign currency payment arrangements

If the foreign currency deferred payment arrangements for the eligible IRP transaction/RAS involve payment or other satisfaction of the relevant amounts payable under the arrangements more than 12 months after the date the amounts become due then the following codes are shown for the relevant IRP transaction/RAS:

•  code indicating longer term foreign currency deferred payment arrangements, and
• code indicating the relevant foreign currency.
• The amount of the FX gains returned or FX losses deducted for the relevant transaction/RAS for Australian income tax.

This should be shown at whichever of the following Transaction Categories are applicable:

• Foreign currency deferred payment arrangement for sale of Tangible Trading Stock (FCDSTTS)
• Foreign currency deferred payment arrangement for purchase of Tangible Trading Stock (FCDPTTS)
• Foreign currency deferred payment arrangement for provision of Services (FCDAPS)
• Foreign currency deferred payment arrangement for acquisition of Services (FCDAAS)
• Foreign currency deferred payment arrangement for rent of real property to IRP (FCDRRP)
• Foreign currency deferred payment arrangement for rent of real property from IRP (FCDRRPI)
• Foreign currency deferred payment arrangement for hire or lease of plant or equipment to IRP (FCDHLP)
• Foreign currency deferred payment arrangement for hire or lease of plant or equipment from IRP (FCDHLPE)
• Foreign currency deferred payment arrangement for share based employment recharge to IRP (FCDSBER)
• Foreign currency deferred payment arrangement for share based employment recharge from IRP (FCDSBERI).

If you have foreign currency deferred payment arrangements for RUIP, ORSR, LF or LHORP Transactions, you will not be able to answer Questions 25, 26 or 27 due to the design specifications for the 2020 local file. If you have longer term foreign currency deferred payment arrangements for these types of transactions, in the 2020 local file you should show:

• the amount of any foreign exchange losses deducted for the arrangements at Question 28 (LCMSF 87)
• the amount of any foreign exchange gains returned for the arrangements at Question 30 (LCMSF 43)

General rules for reporting FX gains and losses (covering all other scenarios)

For any IRP transaction/RAS in the following transaction category or Transaction category groupings:

• IRPD debt interests (including ordinary loans and borrowings)
• IRP derivatives transactions
• IRPD debt factoring or debt securitisation
• Other kinds of IRPDs of a financial nature
• Other revenue non-financial IRPDs – including IRPD cost contribution arrangements
• IRPDs involving disposal or acquisition of tangible property of a non-revenue (capital) nature
• IRPDs involving disposal or acquisition of intangible property of a non-revenue (capital) nature

The following is shown for the relevant IRP transaction/RAS:

• the amount of any FX gains returned and FX losses deducted for the IRP transaction/RAS for Australian income tax
• code indicating the relevant foreign currency.

Appendix 8: Guidance on providing international related party agreements

266. This appendix provides guidance on the provision of International Related Party (IRP) agreements as part of Part B of the local file for country-by-country (CBC) reporting. The rules in this guidance seek to balance the function of the local file and the compliance costs associated with providing agreement documentation in Part B of the local file.
267. Copies of IRP agreements generally need to be provided in Part B for the transactions shown at Part A of the local file which are not covered by the exclusions list.
268. A key design feature of the local file is the requirement to show values in Part A and provide agreements in Part B for individual transactions unless the transaction is covered by one of the eight categories on the exclusions list. This transaction level reporting design feature is expected to significantly improve the ATO’s ability to undertake high level risk assessment of profit shifting through related party transactions.
269. The rules in this guidance seek to balance the function of the local file and the compliance costs associated with providing agreement documentation in Part B of the local file. Accordingly, the ATO will not require all of the agreement documentation for transactions shown at Part A for agreements included in a Relevant Agreement Series (RAS).
270. The rules have been developed to reduce compliance costs while not inadvertently creating opportunities for non-disclosure of potentially significant profit shifting risks through aggregating transactions. For example, the RAS rules are designed so that certain kinds of agreements cannot be aggregated, in particular:              
     1. agreements for financing transactions involving different currencies or different express tenors or duration cannot be aggregated, except to the extent permitted under the special rules for banks
     2. agreements covering derivative, guarantee/indemnity or insurance/reinsurance transactions that hedge, guarantee or insure specific exposures, liabilities or risks which arise in connection with the Reporting Entity’s related party dealings cannot be aggregated with agreements for other derivatives, guarantees/indemnities or insurance/reinsurance
     3. for Reporting Entities that are an offshore banking unit (OBU), agreements for transactions which are OB activities (taxable or deductible at the special concessional income tax rate of 10%) cannot be aggregated with agreements for transactions which are non-OB activities (taxable or deductible at the normal corporate income tax rate, currently 30%).
      
271. Outlined below are:              
     • General principles on providing IRP agreements
     • What comprises written agreements in various scenarios?
     • Relevant Agreement Series
     • Material representative agreements
     • Special rules that apply to OBUs and banks
      

General principles on providing IRP agreements

Written agreement is provided in connection with information provided in Part A for relevant IRP transaction

1. The local file has been designed so that, unless a transaction is on the exclusions list, the values shown in Part A of the local file for a particular transaction are linked with either:              
   2. an agreement provided in Part B or an identified agreement previously provided to the ATO, or
   3. an indication by the Reporting Entity in Part B that either              
      1. there is no written agreement documentation covering the transaction shown at Part A
      2. the Reporting Entity is not able to obtain from any of the related counterparties the written agreement documentation covering the transaction shown at Part A.
       
    
2. If a single written agreement covers more than one kind of transaction category then:          
   2. the information required in Part B will need to be provided for each kind of transaction category covered by the agreement
   3. each of the transactions shown in Part A will need to be linked to the written agreement provided in Part B of the local file.
    

Information to enable identification is needed where written agreements have already been provided to the ATO

1. Agreements for transactions shown at Part A that have already been provided to the ATO do not need to be provided again. However, the following information must be provided in Part B to ensure the ATO can identify the correct agreement:          
   2. the title of the agreement
   3. the year in which the agreement was provided to the ATO.
    
2. If the agreements that have already been provided to the ATO have subsequently been amended and the amendment agreements have not been provided to the ATO, the amendment agreements or the original agreement incorporating the amendments need to be provided at Part B.

No requirement to create written agreement but must indicate in Part B if no written agreement exists

12. Reporting Entities are not required to create written agreement documentation solely for the purposes of Part B of the local file. However, if there is no written agreement documentation, the Reporting Entity must indicate that there is no written agreement in Part B.

Must indicate if written agreement cannot be obtained by Reporting Entity from related overseas counterparty

13. If there is written agreement documentation but the Reporting Entity is not able to obtain this from the related overseas counterparty, the Reporting Entity is required to indicate this in Part B.

What comprises written agreements in various scenarios?

16. It is expected it will often be the case that all the terms of an international related party dealing (IRPD) will be evidenced in a single executed written agreement between a Reporting Entity and its overseas related parties. In this common scenario, the executed written agreement should be provided in Part B.
17. However, if the terms of an IRPD have been amended by written agreement before or during the income year, the executed amendment agreement(s) or the original agreement incorporating the amendments should also be provided in Part B.
18. Where an agreement contemplates that specific terms will be agreed between the parties in another agreement(s), the agreement documentation for the transaction must include the other written agreement(s). For example:              
    4. a written ‘Confirmation’ agreeing the terms of a derivative will be provided together with the International Swaps and Derivatives Association (ISDA) master agreement or other agreement setting out the general terms agreed to apply for any derivative that is contracted between the parties
    5. written agreements for the supply of services, goods or other property ordered or supplied in accordance with an overarching agreement setting out general terms or processes for the supply will be provided together with the overarching agreement.
     

18. Where there is no agreement documentation for the transaction shown at Part A, but the Reporting Entity has other documents which record the terms of the agreement, the Reporting Entity has the option of providing these other documents in Part B.
19. If this scenario applies and the Reporting Entity chooses to use this option, the Reporting Entity will:              
    3. indicate in Part B there is no written agreement documentation covering the transaction shown at Part A
    4. provide the other documents recording the terms of the agreement.
     

Relevant Agreement Series

20. A Relevant Agreement Series (RAS) is a repeating series of transactions or dealings on revenue account between the Reporting Entity and the same IRP entity on the same terms except only for date, volume, price and delivery.
21. For these kinds of transactions, an additional condition needs to be satisfied:              
    3. derivatives
    4. guarantees or indemnities
    5. insurance or reinsurance.
     

In these cases refer to RAS Condition 4.

21. Where an IRP agreement forms part of a RAS:              
    2. in Part A, the values for each kind of transaction category covered by the RAS are aggregated
    3. the criteria in the Exclusions List are applied on the basis of the aggregated amounts
    4. in Part B, written agreement documentation only needs to be provided for a material representative agreement in the RAS that was current during the income year.
     

What qualifies as a RAS?

1. For an agreement series to qualify as a RAS, these four conditions must be met:              
   2. agreements must be with the same IRP
   3. agreements must be on the same terms except for date, volume, price and delivery
   4. the transactions covered by the agreement must be on revenue account
   5. derivative, guarantee/indemnity or insurance/reinsurance agreements hedging, guaranteeing or insuring specific exposures, liabilities or risks arising in connection with the Reporting Entity’s related party dealings cannot be included in the same RAS as other derivative, guarantee/indemnity or insurance/reinsurance agreements.
    
2. The principles for determining a material and representative agreement of a RAS are outlined below at paragraphs 42–43.
3. There are also special rules if the Reporting Entity is an OBU or a bank:              
   3. the special rules for OBUs with respect to OB and non-OB activities are outlined below at paragraph 45
   4. the special rules for Condition 2 with respect to ordinary borrowings and loans, qualifying short term derivatives and qualifying FX derivatives of banks are outlined below at paragraphs 46–58.
    

RAS Condition 1 – agreements are with the same IRP

26. The RAS will only include agreements between the same parties.
27. Where the IRP agreement is between more than two parties, this condition means that all of the parties to the agreement must be the parties to all the other agreements in order for the agreements to qualify as a RAS.

RAS Condition 2 – agreements on same terms except for date, volume, price and delivery

27. The RAS will only include agreements on the same terms except for date, volume, price and delivery.

Agreements on same terms except for date

1. The reference to ‘same terms except for date’ means that the particular dates on which the agreement was entered into and obligations are fulfilled do not need to be the same. For example, the following dates do not need to be the same:              
   2. when goods are delivered
   3. when services are provided
   4. when payments are made
   5. when property is transferred.
    
2. An agreement will not qualify as being part of a RAS if it does not have the same express tenor or duration. For example:              
   2. an agreement under which a loan can only be redeemed by the lender after five years will not be considered to be on the ‘same terms except for date, volume, price and delivery’ as an agreement under which a loan can be redeemed by the lender after one year.
   3. an AUD/USD forward exercisable in nine years and 11 months after its date of effect will not be considered to be on the ‘same terms except for date, volume, price and delivery’ as an AUD/USD forward exercisable in three months after its date of effect.
    

Accordingly, these agreements cannot form part of the same RAS.

Agreements on same terms except for delivery

30. The reference to ‘same terms except for delivery’ means there may be variation in the means by which goods or services provided or obtained under the agreements are delivered. For example, agreements to purchase the same kinds of goods which would otherwise be in the same RAS will not fail RAS Condition 2 merely because one of the agreements provides for delivery by ship to the Port of Sydney and another agreement provides for delivery by ship to the Port of Wollongong.

Agreements otherwise on same terms

1. An agreement will not be on the same terms as another agreement merely because the transaction occurring under both agreements is of the same Table 4 Transaction Category, for example, a fixed-for-floating interest rate swap.
2. RAS Condition 2 also means that a RAS will not include agreements on reverse, or mirror, terms. For example, the following agreements cannot be aggregated for Part A or otherwise included together under a RAS, even if the terms of the agreements are a perfect mirror or reverse of each other:              
   3. an interest rate swap where the Reporting Entity pays floating payments and receives fixed payments cannot be aggregated with an interest rate swap where the Reporting Entity pays fixed payments and receives floating payments.
   4. a borrowing by the Reporting Entity cannot be aggregated with a loan by the Reporting Entity.
   5. a purchase of goods cannot be aggregated with a sale of the same kind of goods.
    
3. Other examples of IRPDs that will not be considered to be ‘on the same terms except for date, volume, price and delivery’ include:              
   2. agreements for sale or purchase of different kinds of tangible property – refer to paragraphs 33-35 below
   3. agreements granting rights to use different intellectual property, for example, different patents
   4. agreements covering financial dealings in different currencies, for example, a loan of Australian dollars versus a loan of US dollars, or a USD/AUD forward versus a Euro/AUD forward
   5. agreements for raising funds in different ways, for example, borrowing under a loan versus obtaining funds by issue of promissory notes
   6. agreements providing guarantee, indemnity or insurance of a different kind of liability or risk, for example, an indemnity of liabilities arising under warranty of products sold to Australian customers versus an indemnity of loans provided to Australian customers
   7. agreements that have different express provisions for termination or damages, for example, agreements that provide for termination by a party only upon payment default versus agreements that may be terminated by a party other than upon default
   8. agreements that are expressly able to be assigned versus agreements that expressly provide they are not able to be assigned.
    

Agreements for sale or purchase of same kind of goods, commodities or raw materials

1. Agreements will not be treated as for the sale or purchase of different kinds of tangible property merely because the agreements cover different particular goods, commodities or raw materials, as long as the goods, commodities and raw materials are of the same kind.
2. For example, agreements covering the following kind of goods, commodities or raw materials may be included in a RAS if the RAS Conditions are otherwise satisfied:              
   3. agreements for the sale or purchase of different specific blends of refined oil
   4. agreements for the sale or purchase of different qualities or physical condition of brown coal
   5. agreements for the sale or purchase of different models of refrigerators and freezers
   6. agreements for the sale or purchase of similar kinds of pharmaceutical products.
    
3. Examples of agreements that would not be treated as for the sale or purchase of the same kind of goods, commodities or raw materials include:              
   2. an agreement for the sale or purchase of aluminium versus copper
   3. an agreement for the sale or purchase of bauxite versus aluminium
   4. an agreement for the sale or purchase of refrigerators versus computers
   5. an agreement for the sale or purchase of various over-the-counter medications versus various medical devices.
    

Special rules for banks in relation to RAS Condition 2

37. Special rules apply to banks which permit, subject to certain conditions, the inclusion of the following transactions in a single RAS if the RAS conditions are otherwise met:              
    2. short term derivatives with different tenors
    3. short term ordinary borrowings or ordinary loans with different tenors
    4. qualifying FX derivatives with differing currency pairs.
     

This means that a variation of RAS Condition 2 may apply to a bank’s qualifying derivatives, loans or borrowings (see paragraphs 46-58 below).

RAS Condition 3 – The transactions covered by the agreement must be on revenue account

41. The transactions covered by the agreement must be on revenue account. Transactions of a capital nature for Australian tax purposes do not qualify for inclusion in a RAS. For example, the assignment of a patent to an IRP cannot be included in a RAS if the assignment is on capital account for taxation purposes.
42. The distinction between a transaction on revenue account and a transaction on capital account for Australian income tax purposes is explained in the instructions to Question 13 of the IDS:
43. Whether dealings are capital or revenue in nature is a matter to be decided based on the facts and circumstances of each case. The leading Australian case on this topic is Sun Newspapers Ltd and Associated Newspapers Ltd v FC of T (1938) 61 CLR 337; 5 ATD 87.
44. This case established that expenditure incurred in establishing, replacing and enlarging the profit yielding structure (i.e. the business entity/structure) is of a capital nature and should be contrasted with working or operating expenses incurred to operate the business or profit yielding structure. The test laid down in the Sun newspapers case requires the following three factors to be considered and weighed in deciding whether expenditure is capital or of a capital nature:

There are many other decisions of the Australian courts applying these principles in Sun Newspapers to various cases. For more information, refer to ATO guidance such as taxation rulings. We strongly recommend that you obtain appropriate guidance or professional advice in relation to the particular facts and circumstances of your case.

RAS Condition 4 – Derivatives / guarantees / insurance for Reporting Entity’s related party exposures / liabilities / risk cannot be included in same RAS as other derivatives / guarantees / insurance

1. Agreements for derivatives, guarantees/indemnities or insurance/reinsurance that are hedging, guaranteeing or insuring specific exposures, liabilities or risks arising in connection with the Reporting Entity’s related party dealings cannot be included in the same RAS as:              
   2. agreements for derivatives which are not hedging or offsetting specific liabilities or exposures, or
   3. agreements for derivatives, guarantees/indemnities or insurance/reinsurance that are hedging, guaranteeing or insuring specific kinds of exposures, liabilities or risks which are not exposures, liabilities or risks arising in connection with the Reporting Entity’s related party dealings.
    
2. For the purpose of applying RAS Condition 4, agreements for derivatives, guarantees/indemnities or insurance/reinsurance that are hedging, guaranteeing or insuring specific exposures, liabilities or risks arising in connection with the Reporting Entity’s related party dealings will not include:              
   2. agreements for derivatives hedging or offsetting specific exposures or liabilities of the IRP derivative counterparty arising in connection with a related party transaction which is not with the Reporting Entity (or a member of the Reporting Entity’s Australian consolidated or MEC group)
   3. agreements for guarantees or indemnities where the Reporting Entity guarantees or indemnifies a liability of the IRP counterparty arising in connection with a related party dealing which is not with the Reporting Entity (or a member of the Reporting Entity’s Australian consolidated or MEC group)
   4. agreements for insurance or reinsurance where the Reporting Entity provides insurance or reinsurance to the IRP counterparty to insure or reinsure risks arising in connection with a related party dealing which is not with the Reporting Entity (or a member of the Reporting Entity’s Australian consolidated or MEC group).
    

Consequences of an IRP agreement being part of a RAS

1. The consequences of an IRP agreement forming part of a RAS are:              
   2. the Reporting Entity must show the aggregated values at Part A for all the agreements in the RAS in relation to each Table 4 Transaction Category covered by the agreement (subject to the special rule for OBUs that OB activities and non-OB activities cannot be aggregated)
   3. in Part A, the Reporting Entity must indicate          
      4. the transaction details shown at Part A for the relevant Table 4 Transaction Category are part of a RAS and whether one of the special rules for banks has been applied
      5. which of the following number bands represent the number of agreements in the RAS during the income year              
         1. 1–5
         2. 6–50
         3. 51 or more
          
       
   4. if the Reporting Entity is an OBU under subsection 128AE(2) of the Income Tax Assessment Act 1936 (ITAA 1936) or section 717-710 of the Income Tax Assessment Act 1997 (ITAA 1997), whether the transactions at Part A are an OB activity under sections 121D and 121EAA of the ITAA 1936
   5. in Part B, the Reporting Entity is only required to provide written agreement documentation for a material representative agreement in the RAS.
   6. Refer to paragraphs 42-43 below for the principles for determining material representative agreements.
    

Material representative agreements

46. A consequence of an agreement being part of a RAS is that the Reporting Entity will only be required to provide written agreement documentation for a material representative agreement in the RAS in Part B for the associated transaction in Part A.
47. The principles for determining a material representative agreement are:              
    3. the documentation for the agreement does not contain materially fewer terms and conditions than documentation for other agreements in the RAS
    4. the documentation for the agreement is not expressed in a more abbreviated or summarised form than documentation for other agreements in the RAS
    5. the agreement documentation is for an agreement which fairly reflects the size and impact of the agreements in the RAS.
     

Special rules that apply to OBUs and banks

47. Special rules apply to certain transactions where the reporting entity is an OBU or a bank.

OBUs: OB and non-OB activity

48. Where a Reporting Entity is an OBU under subsection 128AE(2) of the ITAA 1936 or section 717-710 of the ITAA 1997, agreements for transactions which are OB activities cannot be included in the same RAS as agreements for transactions which are not OB activities. This means that any agreement for a transaction which constitutes an OB activity under section 121D of the ITAA 1936 cannot be included in the same RAS as an agreement for a transaction which the Reporting Entity has chosen to not be an OB activity under section 121EAA.

Banks and short-term ordinary borrowings and ordinary loans: variation of RAS Condition 2

1. A special rule applies to banks which permits the inclusion of ordinary borrowings and ordinary loans with different tenors in a single RAS where:              
   2. the borrowings or loans are not at call or repayable on demand by the lender
   3. the tenor of the borrowings or loans is 12 months or less.
    
2. Where this special rule applies, RAS Condition 2 will be that agreements are on the same terms except for date, volume, price, delivery and tenor.
3. This special rule can only be used where the Reporting Entity or a member of the Reporting Entity’s consolidated group has an unconditional or a conditional Australian banking licence.
4. In Part A, the Reporting Entity will indicate if the special short-term tenor rule for banks has been applied.

Banks and short-term derivatives: variation of RAS Condition 2

56. A special rule that applies to banks permits the inclusion of derivatives with different tenors or durations in a single RAS for derivatives with a tenor or duration of 12 months or less.
57. Where this special rule applies, RAS Condition 2 will be that agreements are on the same terms except for date, volume, price, delivery and tenor.
58. This special rule can only be used where the Reporting Entity or a member of the Reporting Entity’s consolidated group has an unconditional or a conditional Australian banking licence.
59. In Part A, the Reporting Entity will indicate if the special short term tenor rule for banks has been applied.

Banks and FX derivatives: variation of RAS Condition 2

1. A special rule applies to banks which permits the inclusion of qualifying FX derivatives with differing currency pairs in a single RAS. Where this special rule applies, RAS Condition 2 will be that agreements are on the same terms except for date, volume, price, delivery, tenor and currency pair.
2. The conditions for applying this special rule are:              
   3. the Reporting Entity or a member of the Reporting Entity’s consolidated group must have an unconditional or a conditional Australian banking licence
   4. the internal rules of the Reporting Entity’s global group must provide that an entity (FX management entity) in the global accounting consolidated group is responsible for pooling and externally hedging the banking group’s FX risk
   5. the FX management entity enters into FX derivatives that back out, to the FX management entity, the FX exposure for third party customer exposures of the related counterparty (qualifying FX derivatives).
    
3. For the avoidance of doubt, the reference in paragraph 55.c. to FX derivatives backing out the FX exposure for third party customer exposures of the related counterparty:      
   2. includes FX derivatives which offset or effectively hedge:      
      3. a portion of the FX exposure for third party customer exposures of the related counterparty; or
      4. aggregated FX exposure for third party customer exposures of the related counterparty.
       
   3. does not include FX derivatives which:      
      2. offset or effectively hedge exposures which are not FX exposure for third party customer exposures of the related counterparty, or
      3. deliberately or materially overhedge the FX exposure for the relevant third party customer exposures of the related counterparty.
       
    

Appendix 9: Glossary

Table 74: Glossary

Term	Meaning
AUD	Australian dollars
Assignment	Assignment in law or in equity, including without limitation assignment by declaration of trust
Australian entity	An entity which is an Australian resident for tax purposes
Debts	Debt receivables including loan receivables
Debt interest	A debt interest under Division 974 of the ITAA 1997
Equity interest	An equity interest under Division 974 and section 820-930 of the ITAA 1997
Foreign currency	For SGEs which have not made a functional currency choice in accordance with subdivision 960-D of the ITAA 1997, any non-Australian dollar currency. For SGEs which have made a functional currency choice in accordance with subdivision 960-D of the ITAA 1997, AUD and any other currency other than the foreign currency chosen in accordance with that subdivision.
Foreign currency deferred payment arrangements	Transactions involving an obligation for payment in a foreign currency where the date for payment is deferred from the date the obligation for payment arises.
Foreign entity	Any entity which is not an Australian resident for tax purposes
Highest quality financial accounts	The reporting entity's financial reports that report on the reporting entity's assets, liabilities, equity, income, expenses and cashflows (excluding assets, liabilities, equity, income, expenses and cashflows of other entities which are not members of the reporting entity's consolidated or MEC group for Australian tax purposes) for the income year, including where relevant more than one set of reports, which satisfy the following requirements: If there are general purpose financial reports prepared in accordance with AASB, IFRS or US GAAP, those reports. In the case of a reporting entity which is a member of a foreign owned global group, if there are no reports satisfying the requirements in 1, but there are group reporting packs submitted to the reporting entity's overseas global group entities for the purpose of preparing consolidated financial statements and/or central reporting, those reports. If there are no reports satisfying the requirements in 1 or 2; but there are audited general purpose financial reports prepared in relation to the reporting entity; and you have a reconciliation pack to eliminate the effect of other entities that are not members of the reporting entity's consolidated or MEC group for Australian tax purposes, those financial reports and the reconciliation pack. If there are no reports satisfying the requirements in 1, 2, or 3, but there are other reports including but not limited to separate financial statements or special purpose financial statements prepared in accordance with AASB, IFRS or USGAAP, those reports. If there are no reports satisfying the requirements in 1, 2, 3, or 4, but there are management accounts, those reports. If there are no reports satisfying the requirements in 1, 2, 3, 4, or 5, but there are other reports, those reports.
International related party	See IRP and IRPD
Intellectual property (IP)	Trademark, patent, design, copyright, other intellectual property or similar property or rights
International dealings schedule (IDS)	The International dealings schedule, being the income tax return schedule required to be completed as part of the company tax return, partnership tax return, trust tax return or attribution managed investment trust (AMIT) tax return if certain criteria are met
International related party dealings (IRPD)	As defined in the IDS instructions
Issue of ordinary shares	As described for the exclusion list category 'Issue of ordinary shares' in Local File/Master File 2020.
Low value / low risk sale and purchase tangible trading stock agreements	As described for the exclusion list category 'Low value / low risk sale and purchase tangible trading stock agreements' in Local File/Master File 2020
Low value / low risk service agreements	As described for the exclusion list category 'Low value / low risk service agreements' in Local File/Master File 2020.
OBU	An offshore banking unit under subsection 128AE(2) of the ITAA 1936 or section 717-710 of the ITAA 1997
Ordinary shares	Shares issued by a company carrying proportionate rights to voting and to profit and capital distributions, and carrying no special rights
Reimbursement under employee secondment agreements	As described for the exclusion list category 'Reimbursement under employee secondment agreements' in Local File/Master File 2020.
Relevant agreement series	As described in Appendix 8.
Short form exceptions list	List of kinds of transactions, that if entered into by the reporting entity will mean it will not be eligible to complete the short form local file

Use these instructions when completing the 2020 local file as part of your Country-by-County reporting obligations.