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International dealings schedule instructions 2017

For use by companies, trusts and partnerships to assist with the completion of 2017 tax returns.

Last updated 6 July 2017

About these instructions

Use these instructions to help you complete the International dealings schedule 2017 (NAT 73345). The schedule forms part of your entity's tax return.

This publication is not a guide to income tax law. The examples presented in the instructions only illustrate how the schedule should be completed and should not be relied upon for technical guidance. If you feel that this publication does not fully cover your circumstances, you should get help from us or a recognised tax adviser.

You can also provide feedback on any difficulties you have in completing the questions in the schedule. We will use this information for future versions of the schedule. To provide this feedback, you can:

Publications and services

To obtain one of our publications referred to in these instructions or for information about our other services, see More information.

We issue public rulings setting out our policies on the taxation aspects of international related party dealings. It is recommended that if you had any international related party dealings you should be familiar with these rulings. Those public rulings include:

  • TR 2010/7 Income tax: the interaction of Division 820 of the Income Tax Assessment Act 1997 and the transfer pricing provisions
  • TR 2014/6 Income tax: transfer pricing - the application of section 815-130 of the Income Tax Assessment Act 1997
  • TR 2014/8 Income tax: transfer pricing documentation and Subdivision 284-E

See also:

Introduction

Trigger points that will require completion of this schedule

If you are a relevant company, partnership, trust or attribution managed investment trust, you must complete an International dealings schedule if you have written an amount or Y (for yes) at certain labels in your relevant tax return listed below.

Company tax return 2017

Question 6 Calculation of total profit or loss

J Interest expenses overseas

U Royalty expenses overseas

Question 7 Reconciliation to taxable income or loss

C Section 46FA deductions for flow-on dividends

P Offshore banking unit adjustment.

Question 27 International related party dealings/transfer pricing

Y Was 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?

Question 28 Overseas interests

Z Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

Question 29 Thin capitalisation

O Did the thin capitalisation provisions affect you?

Partnership tax return 2017

Question 22 Attributed foreign income

S Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

Question 29 Overseas transactions

W Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property or service transferred or the balance of any loans) greater than $2 million?

O Did the thin capitalisation provisions affect you?

D Interest expenses overseas

E Royalty expenses overseas

Trust tax return 2017

Question 22 Attributed foreign income

S Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

Question 29 Overseas transactions

W Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property or service transferred or the balance of any loans) greater than $2 million?

O Did the thin capitalisation provisions affect you

D Interest expenses overseas

E Royalty expenses overseas

Attribution managed investment trust (AMIT) tax return 2017

If any of the following apply, you must lodge an International dealings schedule 2017.

At Overseas transactions/thin capitalisation on the AMIT tax return you:

  • answered Yes at either of the questions about overseas transactions or thin capitalisation, or
  • included an amount for overseas interest or royalty expenses.

Lodging the IDS for separate AMIT classes

Lodge only one International dealings schedule for the AMIT, including where you have made an election to treat classes as separate AMITs (elective multi-class AMITs).

Permanent establishments (branch operations)

Permanent establishment is defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). It includes business operations carried on by:

  • an Australian resident entity at or through a fixed place of business in another country
  • a foreign resident entity at or through a fixed place of business in Australia.

For more information, see TR 2002/5 Income tax: Permanent establishment - What is 'a place at or through which [a] person carries on any business' in the definition of permanent establishment in subsection 6(1) of the Income Tax Assessment Act 1936?

Although branch operations are not an 'entity' or 'party' separate from the taxpayer who undertakes those operations, working out the taxable profits of branch operations involves attributing actual income and expenditure of the taxpayer on a separate entity basis. Australia has not adopted the OECD's new ‘functionally separate entity’ approach.

For income and expenditure of the taxpayer that is not wholly or directly earned from, or incurred in, its branch operations, the income or expenditure may be attributed to branch operations on the basis of internally recorded 'dealings' on the proviso that those records both:

  • reflect the functions and assets of the business operations carried on at or through the permanent establishment
  • represent the best estimate of branch profits that can be made in the circumstances.

See also:

  • TR 2001/11 Income tax: international transfer pricing- operation of Australia's permanent establishment attribution rules
  • TR 2005/11 Income tax: branch funding for multinational banks

The information collected at question 18 in this schedule includes what you have internally recorded as dealings between you and your branch operations, and income and gains you have returned or the expenses and losses you have claimed in respect of those internally recorded dealings. In the schedule and instructions, unless otherwise stated, a reference to your branch operations includes:

  • business operations carried on by an Australian resident entity at or through a fixed place of business in another country
  • business operations carried on by a foreign resident entity at or through a fixed place of business in Australia.

International related party dealings do not include any 'dealings' with your own branch operations

Questions 2 to 17 collect information in connection with your international related party dealings.

International related party dealings are international commercial or financial dealings or relations between two or more related persons. This includes back-to-back arrangements involving two or more connected transactions involving you and one or more related persons.

For example, international related party dealings include:

  • an agreement with your foreign subsidiary
  • you borrowing from a foreign bank taken together with a relevantly connected loan to the foreign bank from your overseas holding company.

International related party dealings will therefore not include any 'dealing' or commercial or financial relations with your own branch operations.

See also:

QC51248