These instructions will help you complete Schedule 25A 2010.
If you answered yes on your partnership, trust, company or fund tax return to a question that asked if the aggregate amount of your transactions or dealings with international related parties was more than $1 million, complete section A of Schedule 25A and lodge it with the appropriate tax return. The aggregate amount of the dealings is the total amount of all dealings, whether on revenue or capital account, and includes the balance of any loans or borrowings outstanding with international related parties.
If you answered yes on your partnership, trust, company or fund tax return to a question about an overseas branch, an interest in a foreign company, a foreign trust, a foreign investment fund or a foreign life insurance policy, complete all questions in section B of Schedule 25A 2010 and lodge it with the appropriate tax return.
If you answered yes to both questions, complete sections A and B and lodge Schedule 25A 2010 with the appropriate tax return.
Answer the items in Schedule 25A 2010, including yes or no items, that apply to your particular circumstances. If an item or part of an item does not apply, leave it blank.
Related-party international dealings
Section A of Schedule 25A refers to related-party international dealings.
Complete section A if you answered yes to any of the following:
- item 21 of the Company tax return 2010 (NAT 0656)
- W item 29 of the Partnership tax return 2010 (NAT 0659)
- W item 29 of the Trust tax return 2010 (NAT 0660)
- B item 16 of the Fund income tax return 2010 (NAT 71287).
The ATO issues public rulings setting out its policies on taxation aspects of related-party international dealings. See More information.
It is recommended that taxpayers with related-party international dealings be familiar with these rulings. There are also a number of publications about international transfer pricing - visit our website for more information.
Also see the Organisation for Economic Co-operation and Development (OECD) Transfer pricing guidelines for multinational enterprises and tax administrations - 1995.
Definitions of some terms used in Schedule 25A are in appendix 2.
Permanent establishments
If you have a fixed place of business in Australia or overseas, other than a storage or display facility, or if you have a non-independent agent who contracts on your behalf, you may have a 'permanent establishment' in Australia or overseas.
If you do not know whether this is the case, refer to the appropriate international tax agreement for the comprehensive definition of a 'permanent establishment'.
The ATO adheres to a 'single entity' approach in its allocation of profits or income and expenditure in tax matters. That is, a permanent establishment is not to be regarded as a separate legal entity from your head office or other geographically separate business site. However, for the purposes of Schedule 25A, certain items (2a to 2d and 3a to 3b) should be answered on the notional basis that a permanent establishment is a separate but related entity.
Any allocation of profits or income and expenditure between the permanent establishment and the taxpayer's other business sites or activities must be established following the arm's length principle.
Examples
Examples, including suggested answers, for items 2 to 6 of Schedule 25A are provided at appendix 5.
Interests in foreign companies or foreign trusts
Section B of Schedule 25A refers to foreign branches of Australian companies, controlled foreign companies (CFCs), foreign investment funds (FIFs), foreign life insurance policies (FLPs) and controlled foreign trusts (CFTs), and is to be completed in all cases where the answer is yes to any of the following:
- item 23 of the Company tax return 2010
- S or T item 22 of the Partnership tax return 2010
- S or T item 22 of the Trust tax return 2010
- C item 16 of the Fund income tax return 2010.
If section B is to be completed, item 11, and items 13 to 17 (which are all Y for yes and N for no questions), must be answered in all cases. Leave other items blank if they do not apply.