Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-L - Record keeping requirements  

Records about Australian permanent establishments

SECTION 820-960   Records about Australian permanent establishments  

820-960(1)    
If an entity:

(a)    

is an *inward investor (financial) or *inward investing entity (ADI), for all or a part of an income year; and

(b)    carries on its *business at or through one or more of its *Australian permanent establishments throughout that year; and

(c)    has total revenues attributable to those Australian permanent establishments for that year that are at least $2,000,000;

the entity must keep for that year the records for which subsection (1A) or (1B) provides.

Note:

A person must comply with the requirements in section 262A of the Income Tax Assessment Act 1936 about the keeping of these records (see subsections (2AA) and (3) of that section).

Australian accounting standards

820-960(1A)    
If the entity chooses this subsection, it must keep the following records for the *Australian permanent establishments:

(a)    a statement of financial position (within the meaning of the *accounting standards);

(b)    a statement of financial performance (within the meaning of those standards).

The statements must:

(c)    be prepared in accordance with the *accounting standards (in particular, but not limited to, accounting standards AASB 1001, AASB 1018 and AASB 1040); and

(d)    include all the notes required to accompany them under the standards.

Note:

For exemptions, see section 820-962 .

Overseas and international accounting standards

820-960(1B)    
If the entity chooses this subsection, it must keep for the *Australian permanent establishments the statements (however described) that, under standards covered by subsection (1C) or (1D) (the overseas or international accounting standards ), correspond to the statements referred to in subsection (1A) . The statements must:

(a)    be prepared in accordance with those standards; and

(b)    include all the notes required to accompany them under those standards.

820-960(1C)    
This subsection covers the standards (however described) that correspond to the *accounting standards and are made by the responsible body in:

(a)    the United Kingdom of Great Britain and Northern Ireland; or

(b)    the United States of America; or

(c)    Canada; or

(d)    New Zealand; or

(e)    Japan; or

(f)    the French Republic; or

(g)    the Federal Republic of Germany.

820-960(1D)    
This subsection covers the international accounting standards made or adopted by the International Accounting Standards Board.

Requirements for the records under subsection (1A) or (1B)

820-960(2)    
The entity must prepare the records for which subsection (1A) or (1B) provides:

(a)    

before the time by which the entity must lodge its *income tax return for the income year; and

(b)    as if:

(i) the *Australian permanent establishments were an entity (the notional entity ) for which those records would be required to be prepared under the *accounting standards or the overseas or international accounting standards, as appropriate; and

(ii) for the purposes of the statement of financial position or the corresponding statement, as appropriate - the assets, liabilities (including *debt capital) and *equity capital that are attributable to the Australian permanent establishments for that income year were assets, liabilities and equity of the notional entity for that year; and

(iii) for the purposes of the statement of financial performance or the corresponding statement, as appropriate - the revenues and expenses that are attributable to the Australian permanent establishments for that year were the revenues and expenses of the notional entity for that year; and

(iv) the *accounting standards, or the overseas or international accounting standards, as appropriate, referred to income years instead of financial years or the corresponding term in the overseas or international accounting standards.

Commissioner ' s power to exempt from complying with Australian accounting standards

820-960(4)    
(Repealed by No 64 of 2020)

820-960(5)    
(Repealed by No 64 of 2020)

Excluding Australian permanent establishments not covered by applicable double tax treaty

820-960(6)    
An entity need not comply with this section for an income year in relation to an *Australian permanent establishment if:

(a)    throughout that year, the entity was, for the purposes of a double tax agreement (within the meaning of Part X of the Income Tax Assessment Act 1936 ) in relation to a foreign country, a resident of that foreign country (even if the entity was also an Australian resident or a resident of another foreign country); and

(b)    throughout the period during that year when the entity was carrying on its *business at or through that Australian permanent establishment, the Australian permanent establishment was not a permanent establishment within the meaning of that double tax agreement.