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Using the international dealings schedule?

Use these instructions to help you complete the International dealings schedule 2024.

When we say you, your business or taxpayer in these instructions, we mean either:

• you as a business entity – for example, a company, trust or partnership that conducts a business
• you as the tax agent or public officer responsible for completing the schedule.

The international dealings schedule (IDS) forms part of your company, trust or partnership entity's tax return. If you report certain amounts or otherwise answer Y to trigger questions in your tax return you will also need to complete the IDS.

These instructions are not a guide to income tax law. The examples in these instructions only illustrate how the schedule should be completed and should not be relied on for technical guidance. If you feel that these instructions don't fully cover your circumstances, you should contact us or a recognised tax adviser.

For details about the personal information we collect from you, see Privacy notice – International dealings schedule.

We welcome your feedback for this schedule and will consider it in future versions of the schedule. To provide this feedback, you can:

• email idsproject@ato.gov.au
• lodge a paper tax return and include a covering letter with your schedule.

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 and guidance include:

• Taxation Ruling TR 2010/7 Income tax: the interaction of Division 820 of the Income Tax Assessment Act 1997 and the transfer pricing provisions
• Taxation Ruling TR 2014/6 Income tax: transfer pricing – the application of section 815-130 of the Income Tax Assessment Act 1997
• Taxation Ruling TR 2014/8 Income tax: transfer pricing documentation and Subdivision 284-E
• International tax for businesses
• Organisation for Economic Co-operation and Development's (OECD) Transfer pricing guidelines for multinational enterprises and tax administrations – 2017. You can buy a copy at OECD iLibraryExternal Link.

Who must complete an IDS

You must complete an International dealings schedule 2024 if you have written an amount or Y (for yes) at any of the listed labels (also called trigger points or trigger questions) in your tax return:

• Company tax return 2024
• Partnership tax return 2024
• Trust tax return 2024
• Attribution managed investment trust (AMIT) tax return 2024
• Attribution CCIV sub-fund tax return 2024

Company tax return 2024

Complete the International dealings schedule 2024 if you have written an amount or Y (for yes) in your company tax return at:

• Question 6 Calculation of total profit or loss:    
  • label J Interest expenses overseas
  • label U Royalty expenses overseas
• Question 7 Reconciliation to taxable income or loss
  • label C Section 46FA deductions for flow-on dividends
• Question 27 International related party dealings/transfer pricing
  • label 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
  • label 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
  • label O Did the thin capitalisation provisions affect you?

Partnership tax return 2024

Complete the International dealings schedule 2024 if you have written an amount or Y (for yes) in your partnership tax return at:

• Question 22 Attributed foreign income
  • label 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
  • label 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?
  • label O Did the thin capitalisation provisions affect you?
  • label D Interest expenses overseas
  • label E Royalty expenses overseas.

Trust tax return 2024

Complete the International dealings schedule 2024 if you have written an amount or Y (for yes) in your trust tax return at:

• Question 22 Attributed foreign income
  • label 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
  • label 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?
  • label O Did the thin capitalisation provisions affect you?
  • label D Interest expenses overseas
  • label E Royalty expenses overseas

Attribution managed investment trust (AMIT) tax return 2024

If any of the following apply, you must lodge an International dealings schedule 2024.

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).

Attribution CCIV sub-fund tax return 2024

If any of the following apply, you must lodge an International dealings schedule 2024.

At Overseas transactions/thin capitalisation on the Attribution CCIV sub-fund trust 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.

Don't complete the IDS on an aggregated CCIV basis.

Continue to: What's new for the international dealings schedule?

Return to top

We have updated the International dealings schedule 2024 by:

• Updating Section D (thin capitalisation) to reflect the amendments to Division 820 of the ITAA 1997 in Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 and to cover the different rules applying to early balancers, June balancers and late balancers for their 2023-24 income year.
• Removing labels in relation to the ceased Offshore Banking Unit regime.
• Updating country code for label C of question 44 (Exemption from withholding tax) to cover interest withholding tax exemption for Icelandic financial institutions as a result of amending Article 11 of a double tax agreement (DTA) with Iceland.

Continue to: Instructions to complete the international dealings schedule

Before you start

We recommend that you use these instructions when completing the International dealings schedule 2024.

If the information we request is not relevant to your circumstances, leave the fields blank.

All amounts in the schedule are in Australian dollars.

The dollar amounts or values we ask for in this schedule are to be based on your accounting records, unless a question specifically asks for values based on your income tax records.

We welcome your feedback for this schedule and will consider it in future versions. For information about the methods of providing feedback, see Using the international dealings schedule?.

For the definitions of terms used in this schedule, see Definitions.

Question 1 Entity information

Provide your entity's:

• name
• tax file number (TFN)
• Australian business number (ABN).

These details should be exactly the same as those shown on your entity's tax return.

Continue to: Section A: International related party dealings

Return to: Instructions to complete the international dealings schedule

Question 1a Country-by-Country reporting

Country-by-Country (CBC) reporting under Subdivision 815-E of the Income Tax Assessment Act 1997 (ITAA 1997) requires relevant entities, such as CBC reporting entities in relation to income years or periods starting on or after 1 July 2019, to provide 3 statements to the Commissioner:

• a CBC report
• a master file
• a local file.

Print X in the Yes box if Country-by-Country reporting applies to you. Go to question 1b.

Question 1b Local file – Part A

Print X in the Yes box, if Country-by-Country reporting applies to you, and you have lodged Part A of your local file at the same time as your income tax return. Go to question 18.

Question 2a International related party dealings

If during 2023–24, the aggregate amount of your international related party dealings, including the value of any property or services transferred or the balance of any loans, exceeded $2 million, answer Yes and go to question 2b.

This aggregate amount is based on your accounting records. Go to question 2b.

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

International related party dealings are international commercial or financial dealings or relations between 2 or more related persons. This includes back-to-back arrangements involving 2 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.

Question 2b Small business entity

Print X in the Yes box and go to question 18, if all of the following apply:

• you are a small business entity
• you are not a significant global entity
• your international related party dealings do not exceed $5 million and 50% of your 2023–24 aggregated turnover.

Otherwise print X in the No box and go to question 3.

If during 2023–24, the aggregate amount of your international related party dealings (including the value of any property or services transferred or the balance of any loans) exceeded $5 million, you don't need to determine whether your international related party dealings exceeded 50% of your current year aggregated turnover, print X in the No box and go to question 3.

To work out whether you are a small business entity and for more information about calculating your aggregated turnover, see Small business entity concessions – Eligibility.

Question 3 Dealings with related parties not in specified countries

To evaluate and monitor the compliance risks in respect of Australian taxpayers' international related party dealings, apart from those in specified countries or jurisdictions, we need to:

• identify the principal countries or jurisdictions where those dealings are undertaken
• identify the nature and significance of the activities undertaken in those countries or jurisdictions.

The dollar amounts or values asked for in this question are all based on your accounting records.

Only dealings conducted on your own behalf need to be taken into account in the answer to this question. Don't include dealings on behalf of your clients.

The amounts reported at this question may be reported in the financial statements as revenue and gains or expenses and losses, depending on the accounting treatment of the relevant question.

For example – for derivatives, depending on your accounting treatment, you may either:

• report revenue or expenses from net cash flows
• report a gain or loss in fair value.

Therefore, for the purposes of this question the following terms are interchangeable:

• expenditure and losses
• revenue and gains.

For more information about how to determine the amounts to be included in respect of derivatives, see Question 9.

To complete this question:

• Identify all your international related party dealings during 2023–24.
• Disregard all your international related party dealings of a non-revenue (capital) nature, such as dividends or other distributions of profit on ordinary shares or equity interests of a non-revenue nature.
• Disregard all your dealings with related parties located in specified countries or jurisdictions.
• Group your remaining dealings according to the country or jurisdiction where the related party is located.
• Total the dollar value of your dealings (the total amount of expenses and losses plus the total amount of revenue and gains, excluding principal and principal repayment amounts) for each country or jurisdiction.
• Determine the 3 countries or jurisdictions that have the highest dollar value of related party dealings.
• In respect of the 3 countries or jurisdictions with the highest dollar value of international related party dealings, group the dealings in each of the countries or jurisdictions according to activity type.
• Total the dollar value of your dealings (expenses and losses plus revenue and gains, excluding principal and principal repayment amounts) for each activity type.
• Calculate the 3 activity types with the highest dollar value for each of the 3 countries or jurisdictions.

Print X in the Yes box at question 3 – label A, if you had international related party dealings during 2023–2024, disregarding your dealings with parties located in any of the specified countries or jurisdictions listed in Appendix 1.

If you answer Yes at question 3 – label A, complete the following:

• At labels B, H and N, write the Appendix 2 Foreign and other jurisdiction names and codes in descending order of total dollar value for the 3 countries or jurisdictions with the highest dollar value in respect of your dealings with international related parties located in countries or jurisdictions apart from specified countries or jurisdictions.
• At labels C, I and O, write the Appendix 4 Activity codes in descending order of total dollar value for the 3 activity types with the highest dollar value of international related party dealings in relation to each of the countries or jurisdictions you have identified.
• At labels D, J and P, write the total amount of expenditure and losses incurred (excluding principal and principal repayment amounts) in respect of each activity type you have identified in relation to the relevant country or jurisdiction identified.
• At labels E, K and Q, write the total amount of revenue and gains earned (excluding principal and principal repayment amounts) in respect of each activity type you have identified in relation to the relevant country or jurisdiction identified.
• At labels F, L and R, write the total of all other amounts of expenditure and losses for international related party dealings for the relevant country or jurisdiction identified.
• At labels G, M and S, write the total of all other amounts of revenue and gains for international related party dealings for the relevant country or jurisdiction identified.

Question 4 Dealings with related parties in specified countries

To evaluate any potential compliance risks in respect of Australian taxpayers' international related party dealings in specified countries or jurisdictions, we need to understand the nature of these dealings. Therefore, we seek to identify the principal activities undertaken by Australian taxpayers and related parties in specified countries or jurisdictions, where these activities are mainly undertaken and the extent or significance of these activities.

The dollar amounts or values we ask for in this question are all based on your accounting records.

Only dealings conducted on your own behalf need to be taken into account in your answer to this question. Don't include dealings on behalf of your clients.

For more information about how to determine the amounts to be included in respect of derivatives, see the instructions for Question 9.

To complete this question:

• Identify all your international related party dealings located in specified countries or jurisdictions during 2023–24.
• Disregard all your international related party dealings of a non-revenue (capital) nature, such as dividends or other distributions of profit on ordinary shares or equity interests of a non-revenue nature.
• Group your dealings according to the country or jurisdiction where the related party is located.
• Total the dollar value of your dealings (expenses and losses plus revenue and gains, excluding principal and principal repayment amounts) for each country or jurisdiction.
• Determine the 3 countries or jurisdictions that have the highest dollar value of related party dealings.
• Then, in respect of the 3 countries or jurisdictions with the highest dollar value of international related party dealings, group the dealings in each of the countries or jurisdictions according to activity type.
• Total the dollar value of your dealings (expenses and gains plus revenue and losses, excluding principal and principal repayment amounts) for each activity type.
• Calculate the 3 activity types with the highest dollar value for each of the 3 countries or jurisdictions.

Print X in the Yes box at question 4 – label A, if you had related party dealings with entities in any of the specified countries or jurisdictions listed in Appendix 1, during 2023–24.

If you answer Yes at question 4 – label A, complete the following:

• At labels B, H and N, print the Appendix 2 Foreign and other jurisdiction names and codes in descending order of total dollar value for the 3 specified countries or jurisdictions with the highest dollar values for your dealings with international related parties located in specified countries or jurisdictions.
• At labels C, I and O, print the Appendix 4 Activity codes in descending order of total dollar value for each of the 3 activity types with the highest dollar value for your international related party dealings for each of the 3 specified countries or jurisdictions.
• At labels D, J and P, write the total amount of expenditure and losses incurred (excluding principal and principal repayment amounts) for each of the activity types for the specified country or jurisdiction for which you have written the activity code (at labels C, I and O).
• At labels E, K and Q, write the total amount of revenue and gains earned (excluding principal and principal repayment amounts) for each of the activity types for the specified country or jurisdiction for which you have written the activity code (at labels C, I and O, respectively).
• At labels F, L and R, write the total of all other amounts of expenditure and losses for international related party dealings for the relevant specified country or jurisdiction for which you have written the country or jurisdiction code (at labels B, H and N, respectively).
• At labels G, M and S write the total of all other amounts of revenue and gains for international related party dealings for the relevant specified country or jurisdiction for which you have written the country or jurisdiction code (at labels B, H and N, respectively).

Question 5 Tangible property dealings

The intent of this question is to identify whether you have any international related party dealings involving tangible property of a revenue nature, including trading stock and raw materials, and if so, to quantify those dealings and to ascertain the extent to which the taxpayer has transfer pricing documentation to support those dealings.

The dollar amounts or values asked for in this question are all based on your accounting records.

The definition of trading stock in Division 70-10 of the ITAA 1997 should be used to determine what trading stock is for the purpose of this question.

Internal trading stock transfers to or from your own branch operations should instead be included at question 18 of the schedule. See, International related party dealings, do not include any 'dealings' with your own branch operations.

Print X in the Yes box at question 5 – label A, if you had related party dealings involving tangible property of a revenue nature, including trading stock and raw materials.

If you answer Yes at question 5 – label A, complete the following:

• At label C, write the amount of your gross purchases or expenditure for tangible property of a revenue nature, including trading stock and raw materials obtained from international related party dealings.
• At label D, write the amount of your gross sales or revenue from tangible property of a revenue nature, including trading stock and raw materials provided to international related parties. These amounts will typically be included in trading account items, and will include partially finished goods.
• At label E, print the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used to value intangible property of a revenue nature, including stock in trade and raw materials transactions.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of these dealings involving tangible property of a revenue nature, including trading stock and raw materials, for which you have documentation.
  
  Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question. If you applied one of the simplified record-keeping options in the PCG 2017/2 Simplified transfer pricing record-keeping options for these dealings involving tangible property of a revenue nature, including trading stock and raw materials, print code 7 at label F.

Question 6 Royalties or licence fees

This question seeks information to assess transfer pricing risks arising from royalty and licence fee arrangements between Australian taxpayers and international related parties. We seek to determine the level of these transactions between Australian taxpayers and their international related parties, identify the pricing methodology used in relation to these arrangements and to ascertain the extent to which the taxpayer has transfer pricing documentation to support those dealings.

The dollar amounts or values asked for in this question are all based on your income tax records.

For the purpose of this question royalty or royalties is as defined in subsection 6(1) of the ITAA 1936 and in any applicable double tax agreement in the International Tax Agreements Act 1953 (Schedule 1 – Taipei Agreement) or the Australian Treaty Series. Where there is a conflict between the definition of royalty in subsection 6(1) of the ITAA 1936 and the definition in an applicable double tax agreement, use the definition in the double tax agreement (see subsection 4(2) of the International Tax Agreements Act 1953).

Licence fee refers to any dealings involving the grant or use of a licence, excluding dealings where consideration is a royalty shown at question 6a. The term licence fee has its ordinary meaning.

Question 6a Royalties

Print X in the Yes box at question 6 – label A, if you had international related party dealings involving royalties or licence fees during 2023–24.

If you answer Yes at question 6 – label A, complete the following:

• At label C, write the total amount of royalties payable by you to international related parties claimed as deductions for the income year.
• At label D, write the total amount of royalties you derived from international related parties included in your assessable income for 2023–24.
• At label E, print the Appendix 5 Main pricing methodologies code for principal arm's length pricing method used to set or review consideration for the royalties payable by or derived by you.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving royalties for which you have documentation.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Question 6b Licence fees

At Question 6b, complete the following:

• At label C, write the total amount of licence fees payable by you to international related parties claimed as deductions for 2023–24.
• At label D, write the total amount of licence fees you derived from international related parties included in your assessable income for 2023–24.
• At label E, print the Appendix 5 Main pricing methodologies code for principal arm's length pricing method used to set or review consideration for the licence fees payable by or derived by you.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving licence fees for which you have documentation.
  
  Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Question 7 Rent or leasing

This question seeks information to assess transfer pricing risks arising from rent or leasing arrangements between Australian taxpayers and international related parties. We seek to determine the level of these transactions between Australian taxpayers and their international related parties and identify the pricing methodology used in relation to these arrangements.

Rent and lease or leasing have their ordinary meaning and will include hiring of chattels.

The dollar amounts or values asked for this question are all based on your accounting records.

Print X in the Yes box at question 7 – label A, if you had international related party dealings involving rent or leasing during 2023–24.

If you answer Yes at question 7 – label A, complete the following:

• At label C, write the total amount of rent and leasing charges or fees incurred by you in your dealings with international related parties.
• At label D, write the total amount of rent and leasing income you earned or derived from your dealings with international related parties.
• At label E, print the Appendix 5 Main pricing methodologies code for principal arm's length pricing method used to set or review consideration for the rent and leasing arrangements with international related parties.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving rent or leasing for which you have documentation.
  
  Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question. If you applied one of the simplified record-keeping options in PCG 2017/2 Simplified transfer pricing record-keeping options for these dealings, print code 7 at label F.

Question 8 Service arrangements

Transfer pricing risks arise in respect of service arrangements between Australian taxpayers and international related parties. To quantify these risks, we need to identify the nature and significance of these service arrangements and the pricing methodology used, and ascertain the extent to which the taxpayer has transfer pricing documentation to support those dealings.

Print X in the Yes box at question 8 – label A, if you had international related party dealings regarding service arrangements during 2023–24.

If you answer Yes at question 8 – label A, complete the following. For your international dealings involving each type of services covered by questions 8a to 8j, complete each of those questions as follows:

• At label C, write the total amount of expenditure you incurred for the service type.
• At label D, write the total amount of revenue you earned or derived for the service type.
• At label E, print the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used to set or review consideration for the service type.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of the international dealings for the service type for which you have documentation.
  
  Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question. If you applied one of the simplified record-keeping options in PCG 2017/2 Simplified transfer pricing record-keeping options for your service arrangements, print code 7 at label F at the corresponding question.

The dollar amounts or values asked for in this question are all based on your accounting records.

You must report the total amount of expenditure you incurred, and total amount of revenue you earned or derived, for each category of services with international related parties at questions 8a to 8k. For example, report the total amount of expenditure incurred and the revenue earned or derived in respect of each service category with your international related parties, not the mark-up on costs of services you received or provided in service arrangements with your international related parties.

In completing this question, exclude the following amounts, returned at:

• question 6 relating to royalties or licence fees
• question 9 relating to derivative transactions
• question 11 relating to other dealings of a financial nature including any borrowing or lending transactions.

For the purpose of this question, a service arrangement is one that is based on the performance of work by one party for the benefit of another party (see Employers Mutual Indemnity Association Ltd v. Federal Commissioner of Taxation [1943] HCA 36; (1943) 68 CLR 165 per Latham CJ at 174).

The arrangement may be formal or informal. You may be the customer or the provider of the service.

Where the services are bundled in one charge and your accounting records do not separate them into the distinct service categories in this question. You must reasonably allocate the charge to the relevant service categories in questions 8a to 8j as below.

If you are unable to reasonably allocate all of the charge to the service categories in those questions, show the unallocated amount of the charge at question 8k Other services and write a clear description of the nature of the relevant services received. These services are divided into the following categories:

• 8a Treasury related services
• 8b Management and administration services
• 8c Insurance services
• 8d Reinsurance services
• 8e Research and development services
• 8f Sales and marketing services
• 8g Software and information technology services
• 8h Technical services
• 8i Logistics services
• 8j Asset management services

8a Treasury related services

Activities involved in the managing of the taxpayer's financial operations, including:

• transaction, investment and information services relating to securities, financial assets, financial liabilities, portfolios or other assets held by yourself or an international related party
• the generation of internal and external funding
• risk management systems development and review
• the management of currencies and cash flows
• complex strategies, policies and procedures relating to the taxpayer's finance.

8b Management and administration services

Management and administration services are activities that:

• involve or relate to the control, facilitation, and monitoring of the taxpayer's human resources (staffing) and financial resources (assets)
• relate to administering the day to day business operations of the taxpayer, including
  • back office services
  • administrative services associated with employee share-based plans and recharge amounts
  • accounting services.

Administration services exclude activities relating to financing, marketing or production.

8c Insurance services

Insurance services are activities associated with the management of insurance contracts (predominantly undertaken through intermediaries). Effectively, the expenditure and revenue will represent intermediaries' commissions for providing an insurance management type service (for example, placement of the insurance portfolio to a third party or providing back office functions).

Show the premiums or other expenditure incurred or revenue earned or derived in relation to insurance contracts with international related parties during 2023–24 at question 11e.

8d Reinsurance services

Reinsurance services are activities associated with the management of reinsurance contracts (predominantly undertaken through intermediaries). Effectively, the expenditure and revenue will represent intermediaries' commissions for providing an insurance management type service in relation to reinsurance contracts (for example, placement of the insurance portfolio to a third party or providing back office functions).

Show the premiums or other the expenditure incurred or revenue earned or derived in relation to reinsurance contracts with international related parties during 2023–24 at question 11f.

8e Research and development services

Research and development services are activities associated with the undertaking of research and development services on behalf of a contracting party on a systematic basis in order to develop intellectual property, where the entity providing the research and development services does not take title to any resultant intellectual property created in the provision of the service.

8f Sales and marketing services

Sales and marketing services include provision of services to facilitate the sale of goods or services, and transaction, investment and information services carried out on behalf of customers relating to the customer’s securities, financial assets, financial liabilities, portfolios and or other assets.

Marketing services include activities that involve acquiring new customers or business and maintaining a relationship with them, including:

• advertising
• brand promotion
• sales strategies
• customer support services.

8g Software and information technology services

Software and information technology services are activities involved in the support and maintenance of software and technology used by the taxpayer. Activities relating to the ownership of the software and technology are excluded, such as leasing and rental fees.

8h Technical services

Technical services are activities associated with engineering, architecture, design, project management and mining exploration.

8i Logistics services

Logistics services are activities that relate to transport, freight, storage, scheduling, sourcing and procurement.

8j Asset management services

Asset management services are activities associated with the management of assets, funds or investments undertaken on a discretionary basis in accordance with an investment strategy, with the provider of the services responsible for both of the following:

• acquiring, monitoring, managing and disposing of traditional and non-traditional financial products held by the taxpayer or a related party
• assessing, monitoring and managing the market risks associated with holding the financial products.

8k Other services

Other services are all other services not covered by the above categories. Question 8k Other services should only be used for reporting of amounts which are not covered by the categories of service at questions 8a to 8j.

To complete this question, you must:

• identify all service arrangements between you and international related parties
• group the service arrangements into one of the eleven service categories (including the service arrangement category referred to as Other)
• calculate the total amount of expenditure incurred and the revenue earned or derived in respect of each service category
• identify the principal arm's length pricing method used to set or review consideration in respect of each service arrangement undertaken with international related parties
• identify the percentage of dealings for which you have documentation
• provide a description of the nature of the service arrangements with international related parties recorded under Other services (if applicable).

For your international dealings involving any other kind of services, complete question 8k as follows:

• At label C, write the total amount of expenditure you incurred for the other kinds of services.
• At label D, write the total amount of revenue you earned or derived for the other kinds of services.
• At label E, print the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used to set or review consideration for the other kinds of services.
• At label F, write the Appendix 9 Percentage of dealings with documentation code for the percentage of the international dealings for the other kinds of services for which you have documentation.
  
  Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question. If you applied one of the simplified record-keeping options in PCG 2017/2 Simplified transfer pricing record-keeping options for your service arrangements shown at question 8k, print code 7 at question 8k – label F.
• At label H, write a description of the other kinds of services – limit the description to 200 characters.

Question 9 Derivative transactions

This question collects information about the transfer pricing risks associated with Australian taxpayers' derivative transactions with international related parties. Here you show the total amount for these transactions and an indication of the principal derivative transaction types undertaken.

The dollar amounts or values asked for in this question are all based on your accounting records.

Derivative takes on its ordinary meaning within the context of commercial and accounting practices.

Broadly, a derivative instrument is a contractual right that derives its value from the value of something else, such as a debt security, equity, commodity or specific index. The most common derivative instruments are forwards, options, swaps and credit derivatives. Unlike traditional debt and equity securities, these instruments generally do not involve a return on an initial investment.

The disposal or the acquisition of a derivative would constitute a derivative transaction.

All your derivative transactions with international related parties should be shown at this question, including derivatives entered into for trading, hedging, speculation or arbitrage purposes.

You should not include exchange traded options or exchange traded futures in this question. However, where exchange traded options or futures are not separated from other options or futures in your records they may be included.

Where you use mark-to-market or fair value accounting for financial accounting purposes you may use this method for determining amounts included for derivatives at this question. This will include the net change in fair value of the derivative recorded as a gain or loss in your financial statements for the relevant income year.

For many derivatives (for example, interest rate swaps), the parties to the contract will make payments at regular intervals under the contract. These gross payments should be recorded at this question as captured for accounting purposes. If under the derivative instrument, net cash flows are exchanged at certain specified times during the term of the contract, and only net cash flows are captured for accounting purposes, then the amounts should be included at this question on a net cash flow basis. Principal or notional principal amounts exchanged under the derivatives should not be included.

The net settlement amounts exchanged to close out a forward rate agreement or cross currency swap agreement would be included at this question, but not a principal amount delivered under the agreement.

The amounts payable or derived as option premiums would also be included at this question.

The amounts reported at this question may be reported in financial statements as revenue and gains or expenses and losses, depending on the accounting treatment of your derivatives (and this includes amounts relating to derivatives entered into that are part of a hedging purpose).

Therefore, for the purposes of this question the following terms are interchangeable:

• expenditure and losses
• revenue and gains.

To evaluate the information provided at questions 9a or 9b we need to know whether the Australian taxpayer is conducting derivative trading globally through a trading structure such that profits from the activities are shared with international related parties. Where this is the case there is a transfer pricing risk due to the need to determine the appropriate allocation of profits between the relevant parties. This is the focus of question 9c.

Global trading of financial instruments, including derivatives, is defined by reference to the fact that some part of the business is conducted in more than one tax jurisdiction. This concept of trading derivatives globally is based on the OECD's definition of global trading of financial instruments.

For information about what might constitute global trading, see paragraphs 9 to 11 of the introduction of OECD Document – The Taxation of Global Trading of Financial Instruments (1998). You can buy a copy at OECD iLibraryExternal Link.

To complete this question:

• Identify the derivative transactions undertaken with international related parties.
• Total the expenditure incurred and the revenue earned in respect of these derivative transactions with international related parties.
• Determine the principal arm's length pricing method used to set or review consideration in respect of these derivative transactions.

Print X in the Yes box at question 9 – label A, if you had derivative transactions with international related parties during 2023–24.

If you answer Yes at question 9 – label A, complete the following:

• At question 9a
  • label C, write the total amount of expenditure incurred in respect of your derivatives with international related parties
  • label D, write the total amount of revenue earned or derived in respect of your derivatives with international related parties
  • label E, print the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used to set or review consideration in respect of your derivatives with international related parties
  • label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving derivatives with international related parties for which you have documentation
    
    percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.
• At question 9b– labels G1, G2 and G3, print the Appendix 6 code for the 3 types of derivative transactions you entered into with international related parties that have the highest dollar value.
• At question 9c – label H, print X at either Yes or No depending on whether you engaged in the trading of derivatives globally through a trading structure (irrespective of the type of trading model used) such that you share global profits from these activities with international related parties.

Question 10 Debt factoring or securitisation

Debt factoring and securitisation are finance arrangements entered into by an entity to obtain or provide immediate funds in exchange for disposing of certain financial assets. There is a transfer pricing risk in respect of these arrangements in how the value of the assets being transferred between international related parties is determined.

We are seeking to clarify the extent of these finance arrangements between Australian taxpayers and international related parties, the principal arm's length pricing method used to set or review consideration in respect of these arrangements and to ascertain the extent to which the taxpayer has transfer pricing documentation to support those dealings.

Debt factoring and securitisation have their ordinary meanings within the context of commercial practices.

Broadly, debt factoring is a finance arrangement whereby a business sells its accounts receivable to a third party (factor) at a discount to obtain working capital. The factor then collects the receivables from the business's customers. Debt factoring agreements can either be recourse or non-recourse arrangements. With recourse debt factoring, the factor does not assume the risk of bad debts and may seek recourse from the business for any uncollectible debts. With non-recourse debt factoring, the sale of the receivables essentially transfers ownership of the receivables to the factor, such that the factor obtains all of the rights and risks associated with the receivables.

Securitisation is a structured finance arrangement where an entity (the originator) sells a portfolio of financial assets to a special purpose vehicle. To acquire the assets from the originator, the special purpose vehicle issues tradable securities to fund the purchase. Investors purchase the securities, either through a private offering (for example, by targeting institutional investors) or on the open market. The originator will retain a beneficial interest in the performance of the securities and may also receive a service fee.

The dollar amounts or values asked for in this question are all based on your accounting records.

To complete this question, you must:

• Identify all the debt factoring arrangements and securitisation arrangements you entered into during 2023–24 with international related parties involving you selling or assigning receivables (outward arrangements).
• In respect of any outward debt factoring arrangements      
  • determine the book value of the receivables sold or assigned to the factor for each of these arrangements
  • calculate the total book value of the receivables for all these arrangements
  • ascertain the consideration or payment amount received from the factor for the receivables, in respect of each debt factoring arrangement
  • calculate the total amount of consideration received in respect of all these transactions
  • specify the principal arm's length pricing method used to set or review consideration in respect of these arrangements
  • specify the code for the percentage of dealings for which you have documentation
    percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.
• In respect of any outward securitisation arrangements
  • determine the book value of the assets transferred for each of these arrangements
  • calculate the total book value of the assets for all these arrangements
  • ascertain the amount received from service fees, sales amounts and distributions from the special purpose vehicle arising from the transfer of assets in respect of each securitisation arrangement
  • calculate the total amount of service fees, sales amounts and distributions from the special purpose vehicles arising from all these arrangements
  • specify the principal arm's length pricing method used to set or review the income derived from these arrangements
  • specify the code for the percentage of dealings for which you have documentation
    percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Print X in the Yes box at question 10 – label A, if you entered into any outward debt factoring or securitisation arrangements with international related parties during 2023–24.

If you answer Yes at question 10 – label A, complete the following. If you entered into any inward debt factoring arrangements during 2023–24 with international related parties involving you acquiring receivables or financial assets as the factor, show these arrangements at question 11h.

Question 10a is completed as follows in relation to your international related party dealings involving debt factoring arrangements:

• At label C, write the total amount of the book value of the debt factoring arrangements.
• At label D, write the total amount of consideration received for entering into the debt factoring arrangements.
  You need to show the total consideration at label D. Don't instead show at label D merely the net consideration or the difference between the total amount of the book value and total amount of consideration received.
• At label E, print the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used in the debt factoring arrangements.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving debt factoring arrangements for which you have documentation.
  
  Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Question 10b is completed as follows in relation to your international related party dealings involving securitisation arrangements:

• At label C, write the total amount of the book value of the securitisation arrangements.
• At label D, write the total amount of consideration received for entering into the securitisation arrangements.
  You need to show the total consideration at label D. Don't instead show at label D merely the net consideration or the difference between the total amount of the book value and total amount of consideration received.
• At label E, write the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used in the securitisation arrangements.
• At label F, write the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving securitisation arrangements for which you have documentation.
  • Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Question 11 Dealings of a financial nature

This question collects information about your dealings of a financial nature with international related parties, other than those covered in questions 9 and 10.

Your dealings of a financial nature include:

• borrowings or loans
• foreign currency trade related financial liabilities or receivables resulting in assessable foreign exchange gains or deductible foreign exchange losses during 2023–24, for example
  • foreign currency intercompany liabilities for amounts payable by you for purchase of commodities from international related parties which were satisfied during 2023–24
  • foreign currency intercompany receivables for amounts payable to you for provision of services to international related parties which were satisfied during 2023–24
• any deferred foreign currency payment arrangements or other financial liabilities for which you have foreign exchange (FX) gains or losses which are reportable at question 11g.

Internal fund transfers to or from your own branch operations or any other financial dealings in connection with your own branch operations:

• should not be shown at question 11
• should instead be shown at question 18 of the schedule.

For more information, see, International related party dealings which do not include any 'dealings' with your own branch operations.

Loans and interest

Loan arrangement has its ordinary meaning within the context of commercial and accounting practices. In general terms, a loan arrangement is defined as a contract whereby the lender pays a sum of money in consideration of a promise by the borrower to repay the money at some time in the future (and this promise may or may not include the promise to repay interest on the money borrowed). Any amounts that are not a loan but which would be considered to be a debt interest for the purposes of Division 974 of the ITAA 1997 should be included here. This will include redeemable preference shares or promissory notes which satisfy the conditions for a debt interest under subsection 974-20 of the ITAA 1997.

Financial arrangements that are economically in substance a loan arrangement would be regarded as a loan for the purposes of this question. For example, securities arrangements where the collateral is cash, sale and buyback arrangements to be settled in cash, or repurchase agreements (repos) to be settled in cash.

Whether a financial arrangement economically constitutes a loan arrangement is a matter to be decided based on the facts and circumstances of each arrangement.

For arrangements that are economically in substance loans, for the purposes of completing this question, treat:

• the cash collateral or cash settlement amount as the loan amount
• any fees paid or received in respect of those arrangements as interest
• any gain made or loss incurred in respect of those arrangements as interest.

For more information about the concept of what constitutes a loan, see:

• Taxation Ruling TR 92/11 Income tax: application of the Division 13 transfer pricing provisions to loan arrangements and credit balances
• Taxation Ruling TR 2002/16 Income tax: the taxation consequences for taxpayers issuing certain stapled securities.

We recommend that you seek appropriate advice or guidance in light of the particular facts and circumstances of your case.

We expect interest to be the principal expense incurred and revenue earned in respect of your financial arrangements in the nature of loans, and this would be included at question 11c. However, any other expenses and losses or revenue and gains associated with these arrangements, such as borrowing costs should be included at question 11f.

Don't show at this question principal and principal repayment amounts.

To complete this part of the question:

• Identify all your international related party dealings of a financial nature in the nature of loans.
• Divide those loan arrangements into      
  • interest bearing loans
  • interest free loans.
• Calculate the average balance of each of those loan arrangements by      
  • adding up the loan balance amount at the start of the year and the loan balance amounts at the end of each quarter
  • dividing the result by 5.
• Determine the amount of interest expenditure or interest revenue, in respect of interest bearing loans.

Print X in the Yes box at question 11 – label A, if you had any financial arrangements in the nature of loans with international related parties during 2023–24.

If an amount to be written at this question is not relevant for any of your international related party financial arrangements in the nature of loans, leave that space blank.

If you answer Yes at question 11 – label A, complete the following:

• At question 11a
  • At label I, write the average balance of interest bearing loans in relation to amounts borrowed from international related parties.
  • At label K, write the average balance of interest free loans in relation to amounts borrowed from international related parties.

The dollar amounts or values asked for in this question are all based on your accounting records.

• At question 11b
  • At label I, write the average balance of interest bearing loans in relation to amounts loaned to international related parties.
  • At label K, write the average balance of interest free loans in relation to amounts loaned to international related parties.

The dollar amounts or values asked for in this question are all based on your accounting records.

• At question 11c
  • At label C, write the total interest expenditure in respect of the interest bearing loans borrowed from international related parties.
    Don't show your gains or losses from trading in bonds or other financial assets or liabilities at question 11c. You should instead show your gains or losses from trading in bonds or other financial assets or liabilities at question 11h.
  • At label D, write the total interest revenue in respect of the interest bearing loans to international related parties.
    Don't show your gains or losses from trading in bonds or other financial assets or liabilities at question 11c. You should instead show your gains or losses from trading in bonds or other financial assets or liabilities at question 11h.
  • At label F, write the Appendix 9 Percentage of dealings with documentation code for the percentage of the international related party interest you have shown for which you have documentation.
    If you applied one of the simplified record-keeping options in PCG 2017/2 Simplified transfer pricing record-keeping options for the interest you have shown, write code 7 at label F.

The dollar amounts or values asked for in this question are all based on your accounting records.

Guarantees

The expenditure and revenue for guarantees include fees associated with a contract or arrangement under which a party agrees to perform an obligation or discharge a liability of another entity should that entity fail to do so.

Insurance and reinsurance

This part of question 11 asks you to provide details of your expenses incurred and revenue earned or derived in relation to your insurance and reinsurance contracts with international related parties during 2023–24.

Insurance is a means by which an entity can protect itself with an insurance company against the risk of loss. Insurance is commonly categorised into general insurance, life insurance and health insurance.

Expenditure incurred and revenue earned or derived for insurance services with international related parties, including activities associated with the management of insurance contracts (predominantly undertaken through intermediaries), should be shown at question 8c.

Reinsurance is a means by which an insurance company can protect itself with other insurance companies against the risk of losses. Therefore, the question relating to reinsurance is applicable only to insurance companies.

Expenditure incurred and revenue earned or derived for reinsurance services with international related parties, including activities associated with the management of reinsurance contracts (predominantly undertaken through intermediaries), should be shown at question 8d.

The amounts reported for this question should include the expenditure and revenue that would qualify as expenditure or revenue in relation to insurance or reinsurance contracts under relevant Australian accounting standards or comparable foreign accounting standards. For example, premium revenue, claim recoveries, commissions received from reinsurers). At the time of this publication, the 3 key Australian accounting standards relevant to the recognition of expenditure and revenue in relation to insurance or reinsurance include:

• AASB 4 Insurance Contracts
• AASB 1023 General Insurance Contracts
• AASB 1038 Life Insurance Contracts.

As the dollar amounts in this question are based on your accounting records, you should include all of your reinsurance expenditure and revenue in terms of section 148(1) of the ITAA 1936.

If you engaged an intermediary (for example, a broker) in arranging your insurance or reinsurance contracts, even if the intermediary was acting as an independent agent, the intermediary is considered to be acting on your behalf. Therefore, the transactions undertaken by the intermediary on your behalf should be included in your answer to this question.

For each of your financial dealings with international related parties of a type covered by questions 11d Guarantees, 11e Insurance or 11f Reinsurance, complete the question for that financial dealing type as follows:

• At label C, write the total expenditure you incurred for the financial dealing type.
• At label D, write the total revenue you earned or derived for the financial dealing type.
• At label E, print the Appendix 5 Main pricing methodologies code for the main pricing methodology you used to set or review consideration in respect of the financial dealing type.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving the financial dealing type for which you have documentation.

The dollar amounts or values asked for in this question are all based on your accounting records.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Foreign exchange gains and foreign exchange losses

Question 11g asks you to provide details of foreign exchange gains you have returned and foreign exchange losses you have deducted for Australian income tax purposes in relation to dealings with international related parties.

This includes foreign exchange gains you have returned and foreign exchange losses you have deducted during 2023–24 for trade related financial liabilities or receivables, for example:

• foreign currency intercompany liabilities for amounts payable by you for purchase of commodities from international related parties which were satisfied during 2023–24
• foreign currency intercompany receivables for amounts payable to you for provision of services to international related parties which were satisfied during 2023–24.

If you have foreign exchange gains or foreign exchange losses from foreign currency deferred payment arrangements for certain kinds of transactions on revenue account covered by the special local file reporting rules for foreign current deferred payment arrangements, you can chose to rely on those rules for the purposes of completing question 11g. These rules mean you don't need to show the amount of foreign exchange gains or foreign exchange losses from short term foreign currency deferred payment arrangements meeting the requirements in the rules. As a practical matter these special rules are expected to only affect amounts you would otherwise have shown for the following transaction types in Appendix 12:

• Code 3 – IRP trade related liabilities
• Code 4 – IRP trade related receivables.

If these special local file reporting rules for foreign current deferred payment arrangements apply to you, and you choose to use them, the below instructions for question 11g should be treated as modified for amounts you would otherwise have shown for the relevant transactions. This means you may not need to include, in the amounts you show at question 11g, foreign exchange gains or foreign exchange losses from qualifying short term foreign currency deferred payment arrangements.

If you are an entity covered by the taxation of financial arrangements provisions (TOFA) in Division 230 of the ITAA 1997, your assessable foreign exchange gains and deductible foreign exchange losses for financial arrangements covered by TOFA are determined under Division 230 and Subdivision 775-F of the ITAA 1997, as applicable. For more guidance on entities covered by TOFA and the operation of TOFA, refer to the instructions for Question 20 and 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 5 main types of forex realisation events:

1. Forex realisation event 1 happens if you dispose of foreign currency, or a right to receive foreign currency, to another entity.
2. Forex realisation 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).
3. Forex realisation event 3 happens if you cease to have an obligation to receive foreign currency.
4. Forex realisation event 4 happens if you cease to have an obligation to pay foreign currency.
5. Forex realisation 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.

To complete this question:

• Identify all foreign exchange gains you have returned and foreign exchange losses you have deducted in relation to dealings with international related parties.
• Total the dollar value of foreign exchange gains you have returned and foreign exchange losses you have deducted for each Appendix 12 transaction type.
• Determine the 3  transaction types in Appendix 12 for which you have the highest total dollar value of foreign exchange gains returned and foreign exchange losses deducted in relation to dealings with international related parties.
• Use the 3 transaction types for which you have the highest dollar value of foreign exchange gains returned and foreign exchange losses deducted in relation to dealings with international related parties, then group the foreign exchange gains returned and foreign exchange loss deducted in each of the transaction types according to the Appendix 13 currency codes
• Total the dollar value of foreign exchange gains you have returned and foreign exchange losses you have deducted for each currency code.
• Determine the 3 currencies from Appendix 13 with the highest total dollar value of foreign exchange gains returned and foreign exchange losses deducted for each of the top 3 transaction types.
• Total the dollar value of foreign exchange gains you have returned in relation to dealings with international related parties for all other currencies that are not included at Appendix 13 currency codes.
• Total the dollar value of foreign exchange losses you have deducted in relation to dealings with international related parties for all other currencies, if any, not included at Appendix 13 currency codes.

At question 11g, complete the following:

• At labels B, H and N, print the Appendix 12 codes for the 3 transaction types with the highest dollar value of foreign exchange gains returned and foreign exchange losses deducted in relation to dealings with international related parties. Write these codes in descending order of total dollar value.
• At labels C, I and O, print the Appendix 13 currency codes for the 3 currencies for which you have the highest dollar value of foreign exchange gains returned and foreign exchange losses deducted in relation to dealings with international related parties for each of the top 3 transaction types you have identified. Write these codes in descending order of total dollar value.
• At labels D, J and P, write the total amount of foreign exchange losses deducted in respect of each of the top 3 Appendix 13 currencies you have identified in relation to each of the top 3 transaction types identified.
• At labels E, K and Q, write the total amount of foreign exchange gains returned in respect of each of the top 3 Appendix 13 currencies you have identified in relation to each of the top 3 transaction types identified.
• At labels F, L and R, write the total of foreign exchange losses deducted in respect of all other currencies not included in Appendix 13 currency codes for each of the top 3 transaction types identified.
• At labels G, M and S, write the total of foreign exchange gains returned in respect of all other currencies that are not included in Appendix 13 currency codes for each of the top 3 transaction types identified.

All amounts shown at this question are in Australian dollars.

Other financial dealings

Question 11h asks you to provide details of your expenses and losses incurred or revenue and gains earned in relation to your other kinds of financial dealings with international related parties during 2023–24.

At question 11h report only amounts for financial dealings of a kind that are not covered by at questions 9, 10, 11a, 11b, 11c, 11d, 11e and 11g.

Don't show at question 11h dividends or other distributions of profit on ordinary shares or equity interests of a non-revenue nature.

Where the related party dealings involve financial assets, which are not trading stock, acquired for the purpose of disposal and held on revenue account for income tax purposes, you should show at question 11h the net profit or loss. Don't show the gross proceeds of disposal or gross acquisition costs.

Other financial dealings – are dealings in financial instruments that would qualify as financial assets or financial liabilities under:

• relevant Australian accounting standards
• comparable foreign accounting standards but excludes financial instruments that would be treated as a derivative for the purpose of completing question 9.

At the time of this publication, the 2 key Australian accounting standards relevant to this question include:

• AASB 132 Financial Instruments: Presentation
• AASB 139 Financial Instruments: Recognition and Measurement.

You don't need to take into account the debt and equity provisions in Division 974 of the ITAA 1997.

The amounts reported at this question may be reported in the financial statements as revenue and gains or expenses and losses, depending on the accounting treatment of your relevant financial assets and financial liabilities. This includes amounts relating to hedging questions that are classified in the financial statements as financial assets or financial liabilities. For the purposes of this question, the following terms are interchangeable:

• expenditure and losses
• revenue and gains.

For each of your financial dealings of any other kind with international related parties, at question 11h, complete the following:

• At label C, write the total expenditure you incurred for the other kinds of financial dealings.
• At label D, write the total revenue you earned or derived for the other kinds of financial dealings.
• At label E, print the Appendix 5 Main pricing methodologies code for the main pricing methodology you used to set or review consideration in respect of the other kinds of financial dealings.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings involving the other kinds of financial dealings for which you have documentation. The dollar amounts or values asked for in this question are all based on your accounting records.
• At label H, write a description of the other kinds of financial dealings – limit the description to 200 characters.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Question 12 Other dealings of a revenue nature

Question 12 asks whether you had international related party dealings of a revenue nature, apart from the dealings covered in questions 5 to 11.

Don't show at question 12 any dividends or other distributions of profit on ordinary shares or equity interests of a non-revenue nature.

The dollar amounts or values asked for in this question are all based on your accounting records.

We expect the majority of international related party dealings entered into by taxpayers to come within the types of dealings covered by questions 5 to 11.

An international related party dealing of a revenue nature that you included at questions 5 to 11 should not be included at this question regardless of whether it was reported at questions 5 to 11 using tax or accounting figures.

Amounts included in your answers to questions 2 to 4 may be included again at questions 5 to 11.

Print X in the Yes box at question 12 – label A, if you had international related party dealings of a revenue nature, apart from the dealings covered in questions 5 to 11.

If you answer Yes at question 12 – label A, complete the following:

• At label C, write the total amount of expenditure incurred with respect to these other kinds of international related party dealings of a revenue nature.
  Don't show at question 12 – label C any dividends or other distributions of profit paid on ordinary shares or equity interests of a non-revenue nature.
  
  Where the related party dealings involve assets, which are not trading stock, acquired for the purpose of disposal and held on revenue account for income tax purposes, you should show at question 12 the net profit or loss. Don't show the gross proceeds of disposal or gross acquisition costs.
• At label D, write the total amount of revenue earned or derived in respect of these other kinds of international related party dealings of a revenue nature.
  Don't show at question 12 – label D any dividends or other distributions of profit received on ordinary shares or equity interests of a non-revenue nature.
• At label E, print the Appendix 5 Main pricing methodologies code for the principal arm's length pricing method used to set or review the consideration for these other kinds of international related party dealings of a revenue nature.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of these other kinds of international related party dealings of a revenue nature for which you have documentation.
• At label H, write a description of the principal activity undertaken in these other kinds of international related party dealings of a revenue nature. Limit the description to 200 characters.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

Question 13 Tangible/intangible property of a capital nature

Question 13 asks whether you had international related party dealings of a non-revenue (capital) nature, apart from the dealings covered by questions 5 to 11.

The dollar amounts or values asked for in this question are all based on your accounting records.

We expect the majority of international related party dealings entered into by taxpayers to come within the types of dealings covered by questions 5 to 11.

An international related party dealing that you included at questions 5 to 11 should not be included at this question, regardless of whether it was reported using tax or accounting figures.

Capital or revenue in nature

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.

This case established that expenditure incurred in establishing, replacing and enlarging the profit yielding structure (the business entity and 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 3 factors to be considered and weighed in deciding whether expenditure is capital or of a capital nature:

• The nature of the benefit or advantage obtained or secured by the incurrence of the expenditure– for example, whether the expenditure secures an enduring benefit.
• The manner in which the benefit or advantage so obtained or secured is to be relied upon or enjoyed.
• The means adopted to obtain or secure the benefit or advantage.

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

Print X in the Yes box at question 13 – label A, if you had international related party dealings of a non-revenue (capital) nature, apart from the dealings covered in questions 5 to 11.

Otherwise answer No at question 13 – label A and go to question 13f.

If you answer Yes at question 13 – label A, complete the following questions 13a to 13f.

• 13a Disposal or acquisition of tangible property
• 13b Assignment of intellectual property
• 13c Assignment of shares or other equity interests
• 13d Assignment of loans or debts (not liabilities)
• 13e Other disposal or acquisition of intangible property
• 13f Cost plus remuneration for R&D type services

13a Disposal or acquisition of tangible property

Tangible property includes plant and equipment.

In relation to your international related party dealings of a non-revenue (capital) nature involving disposal or acquisition of tangible property, question 13a is completed as follows:

• At label C, write the total consideration paid in respect of these international related party dealings of a non-revenue (capital) nature involving disposal or acquisition of tangible property.
• At label D, write the total amount of consideration received in respect of these international related party dealings of a non-revenue (capital) nature involving disposal or acquisition of tangible property.
• At label G, print the Appendix 10 code for the principal method you used for pricing these acquisitions or disposals involving disposal or acquisition of tangible property.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings of a non-revenue (capital) nature involving disposal or acquisition of tangible property for which you have documentation.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

13b Assignment of intellectual property

Assignment – includes assignment in law or in equity, including assignment by declaration of trust.

Intellectual property includes:

• trademarks
• patents
• registered designs
• copyright
• other intellectual property or similar property or rights including rights granted or protected under foreign law
• interests in or rights granted in respect of any of the above – for example, a license to use a copyright.

In relation to your international related party dealings of a non-revenue (capital) nature involving assignment of intellectual property, question 13b is completed as follows:

• At label C, write the total consideration paid in respect of these international related party dealings of a non-revenue (capital) nature involving assignment of intellectual property.
• At label D, write the total amount of consideration received in respect of these international related party dealings of a non-revenue (capital) nature involving assignment of intellectual property.
• At label G, print the Appendix 10 code for the principal method you used for pricing these international related party dealings involving assignment of intellectual property.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings of a non-revenue (capital) nature involving assignment of intellectual property for which you have documentation.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

13c Assignment of shares or other equity interests

Assignment includes assignment in law or in equity, including assignment by declaration of trust.

Equity interests include an equity interest under Division 974 and section 820-930 of the ITAA 1997. For more guidance on what is an equity interest under Division 974, see Guide to the debt and equity tests.

In relation to your international related party dealings of a non-revenue (capital) nature involving assignment of shares or other equity interests, question 13c is completed as follows:

• At label C, write the total consideration paid in respect of these international related party dealings of a non-revenue (capital) nature involving assignment of shares or other equity interests.
• At label D, write the total amount of consideration received in respect of these international related party dealings of a non-revenue (capital) nature involving assignment of shares or other equity interests.
• At label G, print the Appendix 10 code for the principal method you used for pricing these international related party dealings involving assignment of shares or other equity interests.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings of a non-revenue (capital) nature involving assignment of shares or other equity interests for which you have documentation.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

13d Assignment of loans or debts (not liabilities)

Assignment includes assignment in law or in equity, including assignment by declaration of trust.

Loans or debts (not liabilities) include debt receivables and loan receivables.

In relation to your international related party dealings of a non-revenue (capital) nature involving assignment of loans or debts (not liabilities), question 13d is completed as follows:

• At label C, write the total consideration paid in respect of these international related party dealings of a non-revenue (capital) nature involving assignment of loans or debts (not liabilities).
• At label D, write the total amount of consideration received in respect of these international related party dealings of a non-revenue (capital) nature involving assignment of loans or debts (not liabilities).
• At label G, print the Appendix 10 code for the principal method you used for pricing these international related party dealings involving assignment of loans or debts (not liabilities).
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings of a non-revenue (capital) nature involving assignment of loans or debts (not liabilities) for which you have documentation.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

13e Other disposal or acquisition of intangible property

Other disposal or acquisition of intangible property includes the issue of new shares or other equity interests.

The issue of equity interests include the issue of an interest which is an equity interest under Division 974 and section 820-930 of the ITAA 1997. For more guidance on what is an equity interest under Division 974, see Guide to the debt and equity tests.

In relation to your international related party dealings of a non-revenue (capital) nature involving other disposal or acquisition of intangible property, question 13e is completed as follows:

• At label C, write the total consideration paid in respect of these international related party dealings of a non-revenue (capital) nature involving other disposal or acquisition of intangible property.
• At label D, write the total amount of consideration received in respect of these international related party dealings of a non-revenue (capital) nature involving other disposal or acquisition of intangible property.
• At label G, print the Appendix 10 code for the principal method you used for pricing these international related party dealings involving other disposal or acquisition of intangible property.
• At label F, print the Appendix 9 Percentage of dealings with documentation code for the percentage of your international related party dealings of a non-revenue (capital) nature involving other disposal or acquisition of intangible property for which you have documentation.

Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.

13f Cost plus remuneration for R&D type services

This question aims to identify whether you have performed research and development (R&D) type activities for the benefit of a related party in another country where you received or were entitled to receive remuneration for performing these activities at an amount based on the costs of these activities plus an agreed margin (cost plus basis). This includes expenses qualifying for the R&D tax incentive and all other R&D expenses which do not qualify for the R&D incentive.

Print X at Yes at question 13f – label A If you have performed R&D for the benefit of a related party in another country where you have been remunerated on a cost plus basis.

If you answer Yes, you must specify:

• at question 13f – label C the amount of your relevant R&D costs
• at question 13f – label D the amount of the cost plus margin received.

For information, see Research and development tax incentive.

For more information on transfer pricing and the cost plus method, see Chapter 3 of TR 97/20 Income tax: arm's length transfer pricing methodologies for international dealings.

Question 14 No payment or non-monetary payment

Question 14 asks whether you have had any international related party dealings involving no payment or a non-monetary payment (as defined below). Information regarding the nature of these dealings and where they occurred will further assist us in identifying if there have been international related party dealings that give rise to a:

• transfer pricing risk (but would not be reported at other questions in the schedule due to the nature of the consideration being nil or non-monetary)
• a capital gains tax risk.

See the instructions to question 13 for guidance on whether dealings are capital or revenue in nature.

Print X at Yes at question 14 – label A, if you had any international related party dealings involving no payment or a non-monetary payment.

If you answer Yes at question 14 – label A, complete the following:

• 14a No payment
• 14b Non-monetary payment

14a No payment

Where there has been no charge or other consideration payable for the provision of services, transfer of property or other benefit provided under an international related party dealing, then this would be taken to be a dealing involving no payment.

You are not required to report at this question any interest free loans disclosed at question 11.

You are not required to report transactions where you have received a benefit for no payment.

You must report transactions where you have provided a benefit for no payment.

In relation to your international related party dealings involving no payment, question 14a is completed as follows:

• At label B (in the column headed Capital), print the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a non-revenue (capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving no payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
• At label C (in the column headed Capital), print the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a non-revenue (capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving no payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.
• At label D (in the column headed Revenue), print the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a revenue (non-capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving no payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
• At label E (in the column headed Revenue), print the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a revenue (non-capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving no payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.

14b Non-monetary payment

A dealing involving a non-monetary payment may be a barter, swap, bonus or discount, or any type of similar arrangement.

A non-monetary payment will generally include consideration that is not one of the following:

• monetary payment
• payment by cheque
• telegraphic and bank-to-bank transfer of funds.

Debt-for-equity swaps will be taken to be a non-monetary payment.

In relation to your international related party dealings involving a non-monetary payment, question 14b is completed as follows:

• At label B (in the column headed Capital), print the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a non-revenue (capital) nature involving a non-monetary payment.
  If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving a non-monetary payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
• At label C (in the column headed Capital), print the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a non-revenue (capital) nature involving a non-monetary payment.
  If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving a non-monetary payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.
• At label D (in the column headed Revenue), print the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a revenue (non-capital) nature involving a non-monetary payment.
  If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving a non-monetary payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
• At label E (in the column headed Revenue), print the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a revenue (non-capital) nature involving a non-monetary payment.
  If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving a non-monetary payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.

Question 15 Share-based employee remuneration

Question 15 seeks information to assess the specific transfer pricing risk of Australian taxpayers receiving or paying incorrect or no recharge amounts for providing or receiving employee share-based remuneration to employees of non-resident subsidiaries. We want to ascertain the level of recharge amounts being received or paid by Australian taxpayers and the pricing methodology used in respect of these amounts.

The dollar amounts or values asked for in this question are all based on your income tax records.

Under employee shared-based remuneration plans, a multinational group may remunerate employees by providing phantom shares in the listed parent company of the group, shares, share options or share rights.

Recharge amount is the compensation you received or paid in return for providing the employees with share-based remuneration. The recharge amount doesn't include any compensation received or paid in relation to the costs of administering an employee share-based plan since this would be compensation for services that you would report at question 8b.

Employees are individuals who provide personal services or labour to an entity and would be regarded as employees of that entity for legal or tax purposes. For example, employees would include the directors of a non-resident subsidiary.

Where an employee holds a position of employment in both an Australian taxpayer and a non-resident subsidiary of the taxpayer, consideration should be given to the 'capacity' in which the share-based remuneration is received. For example, where an individual is an employee of the Australian taxpayer and a director of a non-resident subsidiary, any share-based remuneration paid by the Australian taxpayer to the individual in their capacity as a director of the non-resident subsidiary would be included at this question. This accords with the approach taken in Article 16 of the OECD Model Tax Convention regarding the allocation of taxing rights (which provides that payments received by a resident of a contracting state in their capacity as a director of a company resident in the other contracting state may be taxed in that other state).

For more information about share-based remuneration plans for employees of non-resident subsidiaries, including application of the arm's length principle to arrive at an appropriate recharge amount, see OECD Tax Policy Studies No. 11 (2005) – The Taxation of Employee Stock Options (particularly Chapter 4 – Impact on Transfer Pricing). You can buy this at OECD iLibraryExternal Link.

To complete this question:

• Identify the share-based employee remuneration provided to or received from international related parties.
• Determine whether there is a recharge amount paid or received in relation to the share-based remuneration provided to your employees.
• Determine the total amount of the recharge amounts paid by you during 2023–24.
• Determine the total amount of the recharge amounts received by you during 2023–24.

Print X in the Yes box at question 15 – label A, if you did provide (or receive) share-based remuneration to any employees of an international related party during 2023–24.

If you answer Yes at question 15 – label A, complete the following:

• At label C, write the total recharge amounts you claimed as deductions for 2023–24.
• At label D, write the total recharge amounts you included in your assessable income for 2023–24.

Question 16 Cost contribution arrangement

Question 16 seeks information to understand whether there was a cost contribution arrangement for developing, producing or obtaining assets or rights with an international related party.

For more detail on cost contribution arrangements TR 2004/1 Income tax: international transfer pricing – cost contribution arrangements – paragraph 14. You should not include any cost contribution arrangements which are pure service arrangements, as described in TR 2004/1.

Print X in the Yes box at question 16 – label A, if you had a cost contribution arrangement for developing, producing or obtaining assets or rights with any international related parties.

Question 17 Restructuring events

Question 17 seeks to identify significant restructures undertaken between Australian taxpayers and international related parties or your branch operations.

Disclosing a restructuring event at this question doesn't mean you don't still need to show specific international related party dealings at other questions. For example, if the restructuring event includes an acquisition, disposal or assignment of a capital nature during 2023–24 with an international related party, you will still need to show the consideration paid or consideration received for that acquisition, disposal or assignment at question 13.

For the purposes of this question we have adopted a wide meaning of restructuring which goes beyond the generally accepted financial definition.

Restructuring events for the purposes of this question, consistent with the definition in TR 2011/1 Income tax: application of transfer pricing provisions to business restructuring by multinational enterprises, are arrangements whereby assets, functions or risks of a business are transferred between you and international related parties, or your branch operations. This may include:

• reorganisation of your structure resulting in the disposal or acquisition of entities or the change in ownership of entities
• establishing, expanding, downsizing, liquidating or relocating business operations or business lines, resulting in
  • the acquisition or the disposal of assets or liabilities (tangible or intangible)
  • the transfer of functions or the significant modification of service arrangements between yourself and international related parties (for example, this may include transfer of agency, distribution, finance, information technology, insurance, logistics, marketing, sales, shared services, shipping, trading, transport and treasury functions)
  • the transfer of risks between yourself and international related parties
  • the increase or decrease of rights or obligations
• where there has been a change in the nature of the business carried on through your branch operations – for example, you have commenced or ceased to use your property in your branch operations or you have commenced or ceased to perform functions or services through your branch operations.

There are compliance risks associated with restructures, particularly those involving international related parties. In order to analyse the compliance risks of these restructures we need to understand the nature of restructuring undertaken by Australian taxpayers with international related parties.

This question also collects information about restructures involving your branch operations. Aspects of these restructures may be reflected in internally recorded 'dealings' with your branch that record the attribution of your income and expenditure to the branch operations.

The dollar amounts or values asked for in this question are all based on your accounting records.

We recognise that this question asks you to determine a value for each restructure, even though there may not be payment of consideration in respect of some transactions forming part of the restructure. For these transactions we ask you to make a reasonable determination of the value. We don't expect you to obtain a formal valuation for this purpose.

For the purpose of this question the most material restructuring events aggregates 2 elements:

• The capital value of each restructure. This will be the value of the restructure shown at question 17a – label D and should be the aggregated value of the restructure in terms of acquiring or disposing of assets, liabilities, functions, risks, rights or obligations.
• The gross impact on transactions reflected in your income and expenditure for international related party dealings, including in the next 5 years, resulting from each restructure.

To complete this question:

• disregard all restructures where there is no international related party or branch operation involvement
• determine the 3 most material restructure events.

Print X in the Yes box at question 17– label A, if during 2023–24 you had restructuring events involving international related parties or branch operations.

If you answer Yes at question 17a, complete the following:

• At label C, select branch B or entity E for the type of related party involved in the restructure. Identify the principal international related party involved in each of the 3 restructures.
• At label D, select the code at Appendix 11 which indicates the relevant capital value of the first restructure listed, then determine the aggregated value shown in your accounting records during 2023–24 for each remaining restructure event in terms of acquiring or disposing of assets, liabilities, functions, risks, rights or obligations.

You will still need to show any specific international related party dealings connected with the restructuring event at other relevant questions. For example, if the restructuring event includes an acquisition, disposal or assignment of a capital nature during 2023–24 with an international related party, you will still need to show the consideration paid or consideration received for that acquisition, disposal or assignment at question 13.

• At label E, print the Appendix 7 code that best describes the nature of the restructure in terms of the asset, liability, function, risk, right or obligation.
• At label G, specify the code of the country in which the principal international related party to the relevant restructure was located, or the foreign country relevant to your branch operations.
• At label F, identify the code for the percentage of dealings for which you have documentation.
  • Percentage of dealings with documentation refers to the aggregate dollar amount of transactions reported at this question for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at this question.
• At label H, write a brief description of the main elements of the restructure; the description should include both the initial transfer of assets, liabilities, functions, risks, rights or obligations and the resulting change in international related party dealings, including in future years. In the example below, the description could be 'ceased New Zealand branch operations, dealing in derivative contracts continued with other world-wide associates'. The description should be limited to 3,000 characters.
• At label I, indicate if there was a contemporaneous, professional valuation study or transfer pricing analysis of the restructuring event undertaken. Transfer pricing analysis refers to transfer pricing documentation as discussed in Appendix 9.

At question 17b, answer Yes if you revalue any assets following the restructuring events involving international related parties or your branch operations.

Question 18 Branch operations

Question 18 collects the amounts you have deducted or returned (for Australian tax purposes) for your internally recorded ‘dealings’ with your branch operations. This includes:

• if you are a non-resident, internally recorded ‘dealings’ with your Australian branch operations
• if you are a resident, internally recorded ‘dealings’ with or between your overseas branch operations.

The dollar amounts or values asked for in this question are all based on your accounting records.

These amounts record the attribution of your income and expenses or costs to your branch operations, where the income or expenses or costs were not wholly or directly earned from or incurred in your branch operations. For more information, see Permanent establishments (branch operations).

This question doesn't collect information about amounts you have deducted or returned for actual transactions between different related persons or entities connected with the branch operations of one of those persons or entities. Show your international related party dealings at questions 3 to 17 as applicable.

For example, don't show at this question, amounts for a contract or transaction between you and your Australian resident subsidiary in relation to the offshore branch operations of your subsidiary. Show these amounts as applicable in questions 3 to 17.

If you are an authorised deposit-taking institution (ADI) within the meaning of section 995-1 of the ITAA 1997 and are covered by TR 2005/11, include at questions 18a – label I and 18b – label I any funds, used in your Australian or offshore branch operations, that you have internally recorded as a 'loan' with your branch operations that records your attribution of your income or expenditure to the branch operations.

TR 2005/11 doesn't apply to Australian branch operations carried on by a foreign bank (or other qualifying financial entity) to which Part IIIB of the ITAA 1936 applies. The foreign bank (or qualifying financial entity) should instead complete question 40 of this schedule in relation to internally recorded inbound ‘loans’ to its Australian branch operations and any internally recorded derivative or foreign exchange covered by section 160ZZZE or section 160ZZZF (unless it has elected under section 160ZZVB of the ITAA 1936 that Part IIIB not apply).

For the avoidance of doubt, for all internally recorded outbound ‘loans’ made in the course of its Australian branch operations, a foreign bank (or other qualifying financial entity) should include

• at question 18b – label I, the 'Average balance' for 'Amounts loaned'
• at question 18b – label J, the 'Interest' for 'Amounts loaned'.

These labels are required to be completed for such internally recorded outbound ‘loans’ regardless of whether or not you have elected out of Part IIIB of the ITAA 1936.

If you are not an ADI covered by TR 2005/11, include at question 18c – labels I and J the amounts that you have internally recorded for the supply or acquisition of trading stock to or from your branch operations in accordance with paragraph 5.16 of TR 2001/11.

At question 18d – labels I and J, show any other amounts that you have deducted or returned (for Australian tax purposes) for your internally recorded ‘dealings’ with your branch operations.

At question 18d – label L write a description of the kind of expenditure or cost you have deducted, or income you have returned, for the internally recorded ‘dealings’ for which you included an amount at question 18d.

A foreign bank (or qualifying financial entity) with Australian branch operations to which Part IIIB of the ITAA 1936 applies should not show at question 18d – labels I and J any amounts taken to be paid under section 160ZZZE or section 160ZZZF. Amounts taken to be paid under section 160ZZZE or section 160ZZZF should only be shown at question 40b – labels G to J.

More than one amount and description can be included at question 18d – labels I, J and L (the methodology is described below).

Print X in the Yes box at question 18 – label A, if you have any branch operations, Don't include your international related party dealings, which are instead disclosed at questions 3 to 17 as applicable.

If you answer Yes at question 18 – label A, complete the following:

• At label I, write the average balance of any internally recorded interest bearing loans from your branch operations.
• At label I, write the average balance of any internally recorded interest bearing loans to your branch operations (excluding amounts to which question 40 of this schedule applies).
• At label J, write the total interest calculated for the internally recorded loans from your branch operations shown at question 18a – label I.
• At label J, write the total interest calculated for the internally recorded loans to your branch operations shown at question 18b – label I.
• At label K, write the average balance of internally recorded interest free loans from your branch operations for the purpose of TR 2005/11.
• At label K, write the average balance of internally recorded interest free loans to your branch operations for the purpose of TR 2005/11.
• At label I, write the total purchase costs, claimed for Australian tax purposes, for internally recorded ‘trading stock transfers’ to or from your branch operations.
• At label J, write the total sales proceeds, for Australian tax purposes, from internally recorded ‘trading stock transfers’ to or from your branch operations.
• At label I, write the Total amounts claimed, being total costs or expenditure deducted, for Australian tax purposes, for all other internally recorded ‘dealings’ with your branch operations.
• At label J, write the Total amounts returned, being total income or other amounts returned, for Australian tax purposes, for all other internally recorded ‘dealings’ with your branch operations.
• At label L, write a description of what kind of expenditure or cost you have deducted, or income or other amounts you have returned, for the internally recorded ‘dealings’ with your branch operations which you included at question 18d – labels I or J.

At question 18d, if you have more than one type of other internally recorded ‘dealings’, show the requested total amounts and write a description of each type of 'dealing' separately. That is, for Total amounts claimed and Total amounts returned respectively write a description for each other type of internally recorded ‘dealing’ reflected in each of those amounts. If you are lodging a paper tax return, provide additional information as an attachment to the schedule.

Continue to: Section B: Financial arrangements

Return to: Instructions to complete the international dealings schedule

Question 19 Debt interests and equity interests

Question 19 seeks to help us assess the risk that an interest has been mischaracterised as either:

• a debt interest and inappropriate tax deductions have been claimed
• an equity interest and inappropriate franked distributions have been made.

The information reported at this question may also help us in doing both of the following:

• identifying arrangements with international related parties where the use of hybrid instruments may indicate a tax risk
• assessing any risk regarding your thin capitalisation position.

The dollar amounts or values asked for in this question are all based on your accounting records.

The terms debt interest and equity interest are defined in Division 974 of the ITAA 1997.

To complete question 19:

• Identify all debt and equity interests you had on issue or which you held during 2023–24 that were on issue to or issued by international related parties and where the characterisation between debt and equity is different under Division 974 of the ITAA 1997 from your treatment for accounting purposes.
• Identify which of those financing arrangements would be classified as debt interests and which would be classified as equity interests under Division 974 of the ITAA 1997.
• Identify which of those financing arrangements under which you received finance from a related party and those under which you provided finance to a related party.
• Calculate the average quarterly balance of each relevant financing arrangement (by adding the relevant financing arrangement amount at the end of each quarter and dividing by 4).
• Add up the total of the average quarterly balances of each financial arrangement under which you      
  • received finance from a related party that is characterised as a debt interest under Division 974 of the ITAA 1997
  • provided finance to a related party that is characterised as a debt interest under Division 974 of the ITAA 1997
  • received finance from a related party that is characterised as an equity interest under Division 974 of the ITAA 1997
  • provided finance to a related party that is characterised as an equity interest under Division 974 of the ITAA 1997.

Print X in the Yes box at question 19 – label A, if you had financing arrangements to which this question applies.

If you answer Yes at question 19 – label A, complete the following:

• At label B, write the average quarterly balance of debt interests issued (finance received).
• At label C, write the average quarterly balance of debt interests held (finance provided).
• At label D, write the average quarterly balance of equity interests issued (finance received).
• At label E, write the average quarterly balance of equity interests held (finance provided).

For help working out the tax characterisation of an interest as debt or equity (debt and equity tests), see:

• Division 974 of the ITAA 1997
• Guide to the debt and equity tests
• Debt and equity tests: guide to 'at call' loans.

Question 19a Financial arrangements

Financial arrangements under taxation of financial arrangements rules

Question 19a helps us to identify the quantum of financial arrangements that fall under taxation of financial arrangements (TOFA) rules contained in Division 230 of ITAA 1997 and give rise to TOFA gains or TOFA losses under Division 230, that is not also a debt interest under Division 974.

If you had a financial arrangement for the purpose of Division = 230 that gave rise to TOFA gains or TOFA losses under Division 230, and that financial arrangement is not a debt interest under Division 974:

• Print X in Yes box at question 19a – label A and complete the required fields.
• Specify at question 19a – label B, the total value of all Division 230 financial arrangements that gave rise to TOFA gains or TOFA losses under Division 230 but are not debt interests under Division 974, excluding ordinary shares.

The total TOFA value of the financial arrangements asked for in this question is based on your accounting records.

The TOFA value of the financial arrangements must not be netted off against each other. Hence, financial arrangements that are ‘assets’ of $16 million and financial arrangements that are ‘liabilities’ of $12 million add up to a total TOFA value of $28 million, not $4 million.

If you answer Yes at question 19a – label A, complete the following:

• At label C, include the total value of any TOFA gains recognised in relation to the amount of financial arrangements specified at question 19a – label B, excluding ordinary shares.
• At label D, include the total value of any TOFA losses recognised in relation to the amount of financial arrangements specified at question 19a – label B, excluding ordinary shares.

Ordinary shares are shares issued by a company carrying proportionate rights to voting and to profit and capital distributions, and carrying no special rights.

Question 20 Taxation of financial arrangements rules

Taxation of financial arrangements rules and tax timing method elections

Question 20 aims to identify if you are subject to taxation of financial arrangements (TOFA) rules contained in Division 230 of ITAA 1997. Understanding whether you are subject to the TOFA rules and the tax timing method elections you have made will provide us with the context to understand the information you report regarding your financial arrangements.

The TOFA rules will apply to you if your aggregated turnover, financial assets or assets exceed relevant thresholds or you have otherwise made an election for the TOFA rules to apply.

Print X in Yes box at question 20 – label A, if you are subject to the TOFA rules contained in Division 230 of the ITAA 1997 and complete the required fields.

If you answer Yes, you must specify which (if any) of the tax timing method elections you have made to assess your gains and losses from financial arrangements, at question 20 – labels B to F.

If no election was made, you should complete label G. These tax timing method elections are contained in subdivisions 230-C to 230-F of the ITAA 1997.

For help working out if Division 230 of the ITAA 1997 applies to you and the relevant threshold tests, see:

• Stages 3 and 4: TOFA in Guide to the taxation of financial arrangements
• section 230-455 of the ITAA 1997.

Continue to: Section C: Interests in foreign entities

Return to: Instructions to complete the international dealings schedule

Question 21 Controlled foreign companies and trusts

Question 21 is one of a number dealing with controlled foreign companies (CFCs) and controlled foreign trusts (CFTs). These questions are for the purpose of understanding your interests in and dealings with these overseas entities and assessing compliance with the relevant tax legislation.

21a Did you have any interests in CFCs or CFTs?

An interest in a CFC or CFT may be either direct or indirect, and has the same meaning as given in Division 3 of Part X of the ITAA 1936.

To complete this question, you must identify whether you had an interest in any CFCs or CFTs at the end of 2023–24.

If you had an interest in a CFC or CFT, print X in the Yes at question 21a – label A. Complete questions 21b, 21c, 21d, 21e, 21f and questions 22, 22a, 22b, 23a and 23b.

21b Specify the number of CFCs and CFTs

Specify the number of CFCs and CFTs in which you had an interest at the end of your income year

At question 21b – labels B, C and D:

• Identify the CFCs and CFTs in which if you had an interest at the end of your income year. Then, referring to the tables at Appendix 1 and Appendix 3, identify the category of the country of residency of each CFC or CFT.
• At label B, write the number of your CFCs and CFTs identified as residents of listed countries.
• At label C, write the number of your CFCs and CFTs identified as residents of specified countries or jurisdictions.
• At label D, write the number of your CFCs and CFTs identified as residents of other unlisted countries or jurisdictions.

If the number of CFCs and CFTs is:

• less than 10, write zero, zero (00) as the first 2 digits and then write the number– for example, write 009
• less than 100, write zero as the first digit and then write the number – for example, write 083
• more than 999, write 999
• zero (0), leave the relevant answer blank.

21c Did you acquire any interests in CFCs or CFTs during 2023–24?

Print X in the Yes box at question 21e – label A, if you acquired any associate-inclusive control interest in a CFC or CFT during 2023–24.

The associate-inclusive control interest has the meaning given by section 349 of the ITAA 1936.

At labels B, C and D:

• Identify the CFCs and CFTs in which you acquired any associate-inclusive control interest during 2023–24. Then, referring to the tables at Appendix 1 and Appendix 3, identify the category of the country of residency of each CFC or CFT.
• At label B, write the number of CFCs and CFTs resident in listed countries in which you acquired any associate-inclusive control interest during 2023–24.
• At label C, write the number of CFCs and CFTs resident in specified countries or jurisdictions in which you acquired any associate-inclusive control interest during 2023–24.
• At label D, write the number of CFCs and CFTs resident in other unlisted countries or jurisdictions in which you acquired any associate-inclusive control interest during 2023–24.

If the number of CFCs and CFTs in which you acquired any associate-inclusive control interest during 2023–24 is:

• less than 10, write zero zero (00) as the first 2 digits and then write the number – for example, if the number is 9 write 009
• less than 100 but not less than 10, write zero as the first digit and then write the number – for example, if the number is 83 write 083
• more than 999, write 999.

If you didn't acquire any interests in CFCs or CFTs of any of the 3 categories of the country of residency during 2023–24, write zero for that category.

21d Did you dispose of any interests in CFCs or CFTs during 2023–24?

Print X in the Yes box at question 21d – label A If you disposed of any associate-inclusive control interest in a CFC or CFT during 2023–24.

The associate-inclusive control interest has the meaning given by section 349 of the ITAA 1936.

At labels B, C and D:

• Identify the CFCs and CFTs in which you disposed of any associate-inclusive control interest during 2023–24. Then, referring to the tables at Appendix 1 and Appendix 3, identify the category of the country of residency of each CFC or CFT.
• At label B, write the number of CFCs and CFTs resident in listed countries in which you disposed of any associate-inclusive control interest during 2023–24.
• At label C, write the number of CFCs and CFTs resident in specified countries or jurisdictions in which you disposed of any associate-inclusive control interest during 2023–24.
• At label D, write the number of CFCs and CFTs resident in other unlisted countries or jurisdictions in which you disposed of any associate-inclusive control interest during 2023–24.

If the number of CFCs and CFTs is:

• less than 10, write zero, zero (00) as the first 2 digits and then write the number – for example, if the number is 9 write 009
• less than 100 but not less than 10, write zero as the first digit and then write the number – for example, if the number is 83 write 083
• more than 999, write 999.

If you didn't dispose of any interests in CFCs or CFTs of any of the 3 categories of the country of residency during the income year, write zero.

21e Active income test for statutory accounting periods

Have your CFCs in the following countries satisfied the active income test for their statutory accounting periods under section 432 of ITAA 1936?

The active income test has the meaning given by section 432 of the ITAA 1936.

The statutory accounting period has the meaning given by section 319 of the ITAA 1936.

Print X in the Yes box at question 21e – label A, if your CFCs in listed countries have satisfied the active income test for their statutory accounting periods under section 432 of ITAA 1936,.

Print X in the No box at question 21e – label A, if your CFCs in listed countries have failed the active income test for their statutory accounting periods under section 432 of ITAA 1936.

Print X in both the Yes and No boxes at question 21e – label A, if some of your CFCs in listed countries have satisfied, and some of your CFCs in listed countries have failed, the active income test for their statutory accounting periods under section 432 of ITAA 1936.

Print X in the Yes box at question 21e – label B, if your CFCs in specified countries or jurisdictions have satisfied the active income test for their statutory accounting periods under section 432 of ITAA 1936.

Print X in the No box at question 21e – label B, if your CFCs in specified countries or jurisdictions have failed the active income test for their statutory accounting periods under section 432 of ITAA 1936.

Print X in both the Yes and No boxes at question 21e – label B if some of your CFCs in specified countries or jurisdictions have satisfied, and some of your CFCs in specified countries or jurisdictions have failed, the active income test for their statutory accounting periods under section 432 of ITAA 1936 .

Print X in the Yes box at question 21e – label C, if your CFCs in other unlisted countries or jurisdictions have satisfied the active income test for their statutory accounting periods under section 432 of ITAA 1936.

Print X in the No box at question 21e – label C, if your CFCs in other unlisted countries or jurisdictions have failed the active income test for their statutory accounting periods under section 432 of ITAA 1936.

Print X in both the Yes and No boxes at question 21e – label C, if some of your CFCs in other unlisted countries or jurisdictions have satisfied, and some of your CFCs in other unlisted countries or jurisdictions have failed, the active income test for their statutory accounting periods under section 432 of ITAA 1936.

To help work out whether your CFCs have passed or failed the relevant tests, see:

• section 319 of the ITAA 1936
• section 349 of the ITAA 1936
• section 432 of the ITAA 1936
• section 316 of the ITAA 1936.

21f Exclude tainted interest income

Did you exclude tainted interest income from the passive income of a CFC which was an AFI subsidiary?

Print X in the Yes box at question 21f – label A, if you excluded tainted interest income from the passive income of a CFC which was an Australian financial institution (AFI) subsidiary under section 326 of the ITAA 1936, and provide the following information.

If all of your AFI subsidiary CFCs have banking licences in their countries, you still need to print X in the Yes box at question 21f – label B, if you excluded tainted interest income from their passive income. However, if all of your AFI subsidiary CFCs have banking licences in their countries, you don't need to specify any amounts at labels D, E, F or G.

If not all, or none, of your AFI subsidiary CFCs have banking licences in their countries, print X in the No box at question 21f – label B.

Print X in the Yes box at question 21f – label C, if the income of any of your AFI subsidiary CFCs which didn't have banking licences in their countries was principally derived from the lending of money within the meaning of the definition of financial intermediary business under section 317 of the ITAA 1936.

Financial intermediary business means either:

• bankingExternal Link business
• a business whose income is principally derived from the lending of money.

At label D, write the total amount of tainted interest income excluded from passive income of your financial intermediary subsidiary CFCs of listed countries for 2023–24 (excluding CFCs with banking licences in their country).

At label E, write the total amount of tainted interest income excluded from passive income of your financial intermediary subsidiary CFCs of specified countries or jurisdictions for 2023–24 (excluding CFCs with banking licences in their country).

At label F, write the total amount of tainted interest income excluded from passive income of your financial intermediary subsidiary CFCs of other unlisted countries or jurisdictions for 2023–24 (excluding CFCs with banking licences in their country).

At label G, write the total amount of tainted interest income excluded from passive income of your financial intermediary subsidiary CFCs (excluding CFCs with banking licences in their country).

At label H, write the number of your financial intermediary CFCs identified as residents of listed countries which excluded tainted interest income from passive income for 2023–24 (excluding any CFCs with banking licences).

At label I, write the number of your financial intermediary CFCs identified as residents of specified countries or jurisdictions which excluded tainted interest income from passive income for 2023–24 (excluding any CFCs with banking licences).

At label J, write the number of your financial intermediary CFCs s identified as residents of other unlisted countries or jurisdictions which excluded tainted interest income from passive income for 2023–24 (excluding any CFCs with banking licences).

If the number of CFCs and CFTs is:

• less than 10, write zero, zero (00) as the first 2 digits and then write the number – for example, if the number is 9 write 009
• less than 100 but not less than 10, write zero as the first digit and then write the number – for example, if the number is 83 write 083
• more than 999, write 999
• zero, write 0.

To help work out the amounts to include, see:

• the exclusion of tainted interest income from passive income under subsection 449(1) of the ITAA 1936
• the meaning of AFI subsidiary given by section 326 of the ITAA 1936
• the meaning of AFI given by section 317 of the ITAA 1936
• the meaning of financial intermediary business given by section 317 of the ITAA 1936
• the meaning of tainted interest income given by section 317 of the ITAA 1936
• the meaning of passive income given by section 446 of the ITAA 1936.

Question 22 Sections 456, 457 and 459A

Question 22 assesses the risk of assessable foreign income for CFCs and CFTs not being correctly accounted for under the relevant tax legislation.

The dollar amounts or values asked for in this question are all based on your tax records.

Section 456 of the ITAA 1936 includes attributable income of a CFC in the assessable income of an Australian resident taxpayer that is an attributable taxpayer.

Section 457 of the ITAA 1936 includes in the assessable income of a resident taxpayer, who is an attributable taxpayer in relation to a CFC, certain amounts in respect of a change of residence of the CFC from an unlisted country or jurisdiction to a listed country or to Australia.

Section 459A of the ITAA 1936 includes amounts in a taxpayer's assessable income where the taxpayer is an attributable taxpayer for a CFC or CFT, and the amount of net income of an Australian partnership or trust includes attributable income which accrues to the benefit of the CFC or CFT, and is not otherwise taxed in Australia.

To complete this question, if you have an amount of foreign income that is assessable under sections 456, 457 or 459A of the ITAA 1936, write the total amount assessable under each of the sections.

To complete labels A, B and C, you must identify the residency of each CFC or CFT for which you included attributable income in assessable income under section 456 of the ITAA 1936 for 2023–24. Work out the attributable income amounts referrable to those entities in each of the following location categories:

• listed country
• specified country or jurisdiction
• other unlisted country or jurisdiction.

For question 22, complete the following:

• At label A, write the total amount of attributable income included in your assessable income under section 456 for CFCs and CFTs of listed countries.
• At label B, write the total amount of attributable income included in your assessable income under section 456 for CFCs and CFTs of specified countries or jurisdictions.
• At label C, write the total amount of attributable income included in your assessable income under section 456 for CFCs and CFTs of other unlisted countries or jurisdictions. Include any attributable income included in your assessable income under section 456 of the ITAA 1936 for the income year that you have not already included at labels A and B.
• At label D, write the total of the amounts written at labels A, B and C.
• At label E, write the total amount included in your assessable income under section 457 of the ITAA 1936. You must complete label E if your assessable income for 2023–24 included an amount assessable under section 457 of the ITAA 1936.
• At label F, write the total amount included in your assessable income under section 459A of the ITAA 1936 for 2023–24. You must complete label F if your assessable income for 2023–24 included an amount assessable under section 459A of the ITAA 1936.

For more information about working out if these provisions apply to you, including an overview of calculations, see the Guide to foreign income tax offset rules 2024.

For companies conducting banking or insurance activities (AFI or Australian financial institutions), there are special rules that apply. These rules are not discussed in the guide. See Subdivision F of Division 8 of Part X of the ITAA 1936.

To help work out the amounts to include, see:

• section 456 of the ITAA 1936
• section 457 of the ITAA 1936
• section 459A of the ITAA 1936
• other relevant provisions in Part X of the ITAA 1936.

Question 22a and 22b Gross revenue of your CFCs

The gross revenue included in the gross turnover of your CFCs is the same as the amount of gross revenue included under subsection 434(1)(a) of the ITAA 1936, before excluding the amounts specified in subparagraphs (i) to (iv) of that paragraph or any other amounts. The gross revenue included in the gross turnover of your CFCs is the total of amounts shown in the accounts of a CFC as gross revenue before any subtractions or deductions are taken into account. The gross revenue amount derived by your CFC must be in accordance with commercially accepted accounting principles, and give a true and fair view of the CFC's financial position.

For the purpose of questions 22a and 22b, the gross revenue derived by your CFC is as shown in the recognised accounts of the CFC for its statutory accounting period, in accordance with section 434(1)(a) of the ITAA 1936 before excluding any of the following amounts in accordance with section 434(1)(a)(i) to (v) of the ITAA 1936:

• an amount derived through a branch in a listed country if the amount is taxed in that country
• a franked dividend
• an amount arising from the disposal of an asset that is taxable Australian property
• a non-portfolio dividend paid to the CFC by a company that is a resident of a listed or unlisted country
• trust amounts arising to the CFC that are attributed
• an amount that is an attribution account payment to the extent that the profits from which the payment was made have been previously attributed to you
• an amount included in the CFC’s assessable income in any year of income, unless the amount is only subject to dividend or interest withholding tax or is not fully taxed – for example, certain shipping or insurance premiums
• amounts that are shown in those recognised accounts as revenue in respect of the disposal of assets
• amounts that are shown in those recognised accounts as revenue from disposing of commodity futures contracts, commodity forward contracts or rights or options in respect of such contracts
• amounts that are shown in those recognised accounts as revenue from currency exchange rate fluctuations.

For the purpose of questions 22a and 22b only, if the recognised accounts of your CFC are prepared in a foreign currency and have not already been converted into Australian dollars as part of your general accounting reporting processes:

• Apply the average foreign exchange rate for calendar year ended 31 December 2023 as per the published at Foreign exchange rates, if your CFC’s statutory accounting period ended on or before 31 March 2024.
• Apply the average foreign exchange rate for financial year ended 30 June 2024 as per the published at Foreign exchange rates, if your CFC’s statutory accounting period ended after 31 March 2024.

If you need a foreign exchange rate for a currency not listed in the schedule, you may use any reasonable externally-sourced exchange rate for that currency.

Question 22a – Specify the gross revenue included in the gross turnover of your CFCs that have and satisfied the active income test.

To complete question 22a, you must separately work out the amounts of gross revenue included in the gross turnover for your CFCs referrable to those CFCs that have satisfied the active income test in each of the following location categories:

• listed country
• specified country or jurisdiction
• other unlisted country or jurisdiction.

For question 22a, complete the following:

• At label A, write the total amounts of gross revenue included in the gross turnover for your CFCs in listed countries for the CFC's income year that have satisfied the active income test.
• At label B, write the total amounts of gross revenue included in the gross turnover for your CFC's in specified countries or jurisdictions for the CFC's income year that have satisfied the active income test.
• At label C, write the total amounts of gross revenue included in the gross turnover for your CFC's in other unlisted countries or jurisdictions for the CFC's income year that have satisfied the active income test.
• At label D, write the total of the amounts at labels A, B and C.

Question 22b – Specify the gross revenue included in the gross turnover of your CFCs that have not satisfied the active income test.

To complete question 22b, you must separately work out the amounts of gross revenue included in the gross turnover for your CFCs referrable to those CFCs that haven't satisfied the active income test in each of the following location categories:

• listed country
• specified country or jurisdiction
• other unlisted country or jurisdiction.

For question 22b, complete the following:

• At label A, write the total amounts of gross revenue included in the gross turnover for your CFCs in listed countries for the CFC's income year that haven't satisfied the active income test.
• At label B, write the total amounts of gross revenue included in the gross turnover for your CFC's in specified countries or jurisdictions for the CFC's income year that haven't satisfied the active income test.
• At label C, write the total amounts of gross revenue included in the gross turnover for your CFCs in other unlisted countries or jurisdictions for the CFC's income year that haven't satisfied the active income test.
• At label D, write the total of the amounts at labels A, B and C.

You are not required to send the record of your workings to us, however you must keep the record with other documentation for your tax return. For further information on record keeping, see Overview of record-keeping rules for business.

To help work out the amounts to include, see section 434(1)(a) of the ITAA 1936.

Question 23 Notional assessable income and allowable deductions in determining attributable income from CFCs

Notional assessable income and notional allowable deductions for your CFCs

Question 23 assesses the risk of notional assessable income and notional allowable deductions for CFCs not being correctly accounted for under the relevant tax legislation.

The dollar amounts or values asked for in this question are all based on your tax records.

Complete the following:

• 23a Specify the amounts of notional assessable income
• 23b Specify the amounts of notional allowable deductions.

23a Specify the amounts of notional assessable income

To complete question 23a, you must work out the notional assessable income amounts for 2023–24 for your CFCs in each of the following location categories:

• listed country
• specified country or jurisdiction
• other unlisted country or jurisdiction.

For question 23a, complete the following:

• At label A, write the total amount of adjusted tainted income that is eligible designated concession income under section 385 of the ITAA 1936 for your CFCs of listed countries.
• At label B, write the total amount of adjusted tainted income not treated as derived from sources in listed countries under section 385 of the ITAA 1936 for your CFCs of listed countries.
• At label C, write the total amount of other notional assessable income under section 385 of the ITAA 1936 for your CFCs of listed countries. Include any notional assessable income under section 385 for CFCs of listed countries that you haven't already included at labels A and B.
• At label D, write the total of the amounts at labels A, B and C.
• At label E, write the total amount of adjusted tainted income under section 384 for your CFCs of specified countries or jurisdictions.
• At label F, write the total amount of other notional assessable income under section 384 for your CFCs of specified countries or jurisdictions. Include any notional assessable income under section 384 of the ITAA 1936 for CFCs of specified countries or jurisdictions that you haven't already included at label E.
• At label G, write the total of the amounts at labels E and F.
• At label H, write the total amount of adjusted tainted income under section 384 for CFCs of other unlisted countries or jurisdictions.
• At label I, write the total amount of other notional assessable income under section 384 for CFCs of other unlisted countries or jurisdictions. Include any notional assessable income under section 384 of the ITAA 1936 for CFCs of other unlisted countries or jurisdictions that you haven't already included at label H.
• At label J, write the total of the amounts at labels H and I.
• At label K, write the total of the amounts at labels D, G and J.

To help work out the amounts to include, see:

• section 384 of the ITAA 1936
• section 385 of the ITAA 1936
• adjusted tainted income under section 386 of the ITAA 1936
• adjusted tainted income that is eligible designated concession income under section 385 of the ITAA 1936, which types of eligible designated concession income are set out in Part 8, regulation 17 of the Income Tax Assessment (1936 Act) Regulation 2015
• notional assessable income under subsection 382(2) of the ITAA 1936
• other relevant provisions in Part X of the ITAA 1936.

23b Specify the amounts of notional allowable deductions

To complete question 23b, you must work out the 2023–24 amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for your CFCs in each of the following location categories:

• listed country
• specified country or jurisdiction
• other unlisted country or jurisdiction.

For question 23b, complete the following:

• At label A, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for CFCs of listed countries.
• At label B, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for CFCs of specified countries or jurisdictions.
• At label C, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for CFCs of other unlisted countries or jurisdictions.
• At label D, write the total of the amounts at labels A, B and C.

To help work out the amounts to include, see for example:

• notional allowable deductions under subsection 382(2) of the ITAA 1936; notional allowable deductions also include your share of CFC losses, if any, that have been claimed as notional allowable deductions in calculating your CFC's attributable income
• subdivision B of Division 7 of Part X of the ITAA 1936
• section 393 of the ITAA 1936
• section 394 of the ITAA 1936
• section 399A of the ITAA 1936
• other relevant provisions in Part X of the ITAA 1936.

Question 24 Foreign branch operations or interests in foreign companies or trusts

Foreign branch operations or any interests in foreign companies or foreign trusts

Question 24 provides us with the amount of non-assessable non-exempt income being derived in different tax jurisdictions and helps identify the nature of that income.

The dollar amounts or values asked for in this question are all based on your tax records.

To complete this question, work out:

• the amount of the foreign income you derived that is non-assessable non-exempt under sections 23AH or 23AI of the ITAA 1936 or subdivision 768-A of the ITAA 1997, and
• the amount of this income derived from entities resident in each of the following location categories
  • listed country
  • specified country or jurisdiction
  • other unlisted country or jurisdiction.

Print X in the Yes box at question 24 – label A, if you had foreign branch operations or any direct or indirect interests in foreign companies or foreign trusts. If you answer No, go to question 25.

If you answer Yes, include the amounts of foreign non-assessable non-exempt income you derived under any of the following:

• section 23AH – foreign branch income of Australian companies; the amount of income reported under section 23AH should include the total of both income and capital gains that are non-assessable non-exempt under that section
• section 23AI – amounts paid out of attributed CFC income
• Subdivision 768-A – foreign equity distributions on minimum 10% participation interests in foreign companies.

If you have no non-assessable non-exempt income under one or more of the above sections, leave the corresponding questions blank.

If you answer Yes at label A of question 24a, complete the following:

• At label B, write the amount of your non-assessable non-exempt income under section 23AH from your listed country foreign branch operations.
• At label C, write the amount of your non-assessable non-exempt income under section 23AH from your specified country or jurisdiction foreign branch operations.
• At label D, write the amount of your non-assessable non-exempt income under section 23AH from your other unlisted country or jurisdiction foreign branch operations.

For question 24b – label E, write the amount of your non-deductible expenses incurred in earning or deriving your non-assessable non-exempt income under section 23AH.

For question 24c, complete the following:

• At label B, write the amount of your non-assessable non-exempt income under section 23AI in respect of your attributed income from your CFCs in listed countries.
• At label C, write the amount of your non-assessable non-exempt income under section 23AI in respect of your attributed income from your CFCs in specified countries or jurisdictions.
• At label D, write the amount of your non-assessable non-exempt income under section 23AI in respect of your attributed income from your CFCs in other unlisted countries or jurisdictions.

For question 24e, complete the following:

• At label B, write the amount of your non-assessable non-exempt income under subdivision 768-A for foreign equity distributions on participation interests from companies in listed countries.
• At label C, write the amount of your non-assessable non-exempt income under subdivision 768-A for foreign equity distributions on participation interests from companies in specified countries or jurisdictions.
• At label D, write the amount of your non-assessable non-exempt income under subdivision 768-A for foreign equity distributions on participation interests from companies in other unlisted countries or jurisdictions.

For help with working out if these provisions apply to you, see sections 23AH or 23AI of the ITAA 1936 or subdivision 768-A of the ITAA 1997.

For the table of:

• specified countries or jurisdictions and codes, see Appendix 1
• listed countries and codes, see Appendix 3.

All foreign countries not listed in the tables of listed countries and specified countries or jurisdictions are included in the other unlisted country or jurisdiction category.

Question 25 Debt deductions in earning NANE foreign income

Debt deductions in earning non-assessable non-exempt foreign income

Question 25 requires you to show the amount of debt deductions you claimed under section 25-90 and the amount of loss you made from financial arrangements you have claimed under subsection 230-15(3) of ITAA 1997 in 2023–24.

To complete this question, ascertain the total amount of debt deductions you have claimed under section 25-90 or the total amount of the losses you made from financial arrangements you have claimed under subsection 230-15(3).

Print X in the Yes box at question 25 – label A, if you had claimed any debt deductions under section 25-90 or losses made from financial arrangements you have claimed under subsection 230-15(3) in 2023–24.

You must complete question 25 – label B, even if you have not claimed debt deductions or a loss from financial arrangements under section 25-90 or subsection 230-15(3).

At question 25 – label B, write the total amount of your debt deductions or loss from financial arrangements claimed under section 25-90 or subsection 230-15(3), respectively, of the ITAA 1997 (costs in relation to a debt interest or losses from a financial arrangement in deriving non-assessable non-exempt income under section 23AI, or 23AK of the ITAA 1936, or subdivision 768-A of ITAA 1997).

At question 25 – label B write zero, if you didn't claim any debt deductions under section 25-90 or any loss from a financial arrangement under subsection 230-15(3).

Question 26 CGT events in relation to interest in a foreign company

Capital gains tax events in relation to your interest in a foreign company

Question 26 seeks information regarding capital gains and capital losses made in relation to non-portfolio interests in foreign companies which will enable us to assess if there is a risk to revenue from foreign sourced capital gains and capital losses not being returned correctly.

To complete this question, show the total amount of the capital gains and losses made for non-portfolio interests in foreign companies and the amount of any reductions made under Subdivision 768-G of ITAA 1997.

Under Subdivision 768-G of the ITAA 1997, if a company held a voting interest of at least 10% in a foreign company, and held that interest for a continuous period of at least 12 months in the 2 years before the specified capital gains tax (CGT) event, it may be entitled to apply this measure; see Subdivision 768-G of the ITAA 1997.

Any reduction you may make in applying Subdivision 768-G of the ITAA 1997 to a relevant capital gain or capital loss will depend on whether you choose to use either the market value method or the book value method to calculate the active foreign business asset percentage of the foreign company.

Each method is subject to meeting eligibility conditions. If the book value method is chosen, a further choice can be made in certain circumstances to use the consolidated accounts method for a foreign company which has wholly-owned foreign subsidiaries. The choice to use any of these methods must be made by the time you lodge your income tax return.

The default method applies if you don't choose to use the market value method or the book value method to calculate the active foreign business asset percentage of the foreign company, or you choose a method that is not available because the eligibility conditions for the method are not satisfied. Under the default method any foreign sourced capital gain you make will not be reduced and any foreign sourced capital loss you make will be reduced to nil. Any choice you make is irrevocable. Once the default method has applied because you don't make a choice or your choice is not available, you can't make a choice to apply a different method. The way you prepare your income tax return sufficiently evidences you making a choice, or not making a choice resulting in the default method applying.

Print X in the Yes box at question 26 – label A If you had a CGT event in relation to your interest in a foreign company,

If you answer Yes at question 26 – label A, complete the following:

• At label B, write the total of your capital gain amounts in respect of your interests in foreign companies (before any reduction under Subdivision 768-G).
• At label C, write the total amount of any capital gain reduction under Subdivision 768-G.
• At label D, write the total of your capital loss amounts in respect of your interests in foreign companies (before any reduction under Subdivision 768-G).
• At label E, write the total amount of any capital loss reduction under Subdivision 768-G.

For more information, see Subdivision 768-G of the ITAA 1997.

Question 27 Transfers to a non-resident trust

Question 27 will help us to identify if there is a risk that income of a non-resident trust estate has not been appropriately returned in the assessable income of an Australian resident transferor.

The dollar amounts or values asked for in this question are all based on your accounting records.

If you answer Yes, provide information about the 3 transfers to a non-resident trust estate with the highest dollar value.

You should answer No to this question where the only transfers involve both of the following:

• the transfer of property or services to a public unit trust that is a non-resident trust estate
• the sole purpose of the underlying transfer was the acquisition of units in the trust estate where the parties to the underlying transfer were at arm's length.

Division 6AAA of the ITAA 1936 will apply to a public unit trust that is non-resident trust estate as defined in section 102AAB of the ITAA 1936 where subparagraph 102AAT(1)(a)(ii) of the ITAA 1936 is satisfied.

Transfers performed for your clients are not included in this question.

Unless otherwise specified, the terms used in this question have the same meaning as set out in Divisions 6 and 6AAA of the ITAA 1936.

Transfer, property and services are defined in section 102AAB of the ITAA 1936. Sections 102AAJ and 102AAK of the ITAA 1936 provide whether there was a transfer or a deemed transfer of property or services to a non-resident trust estate for the purpose of Division 6AAA.

Print X at the Yes box at question 27 – label A, if, during the last 3 income years including the current one, you have directly or indirectly transferred property, money or services to a non-resident trust, where that non-resident trust was still in existence during the income year.

If you answer Yes at question 27 – label A and complete the following:

• At label B, write the amount or value of the 3 transfers of the highest dollar value in descending order of total dollar value.
• At label C, write the relevant Appendix 8 exemption code in respect of the transfer amount written at label B of the same row. For those transfers to which no exemption code applies, write code 7 at the corresponding question 27 – label C.

For the list of the transferor trust exemption codes, see Appendix 8.

Question 28 Non-resident trusts and foreign hubs

In question 28, complete the following:

• Question 28a
• Question 28b

Question 28a

Were you a beneficiary of a non-resident trust or did you have an interest in, or an entitlement to acquire an interest in, either the income or capital of a non-resident trust during 2023–24?

Question 28a will help us to identify if there is a risk that income of a non-resident trust estate has not been appropriately included in the assessable income of an Australian resident beneficiary.

Unless otherwise specified, the terms used in this question have the same meaning as set out in Divisions 6 and 6AAA of the ITAA 1936.

To complete this question, work out whether one of the following applied during 2023–24:

• you were a beneficiary of a non-resident trust estate
• you had an interest in the income or capital of a non-resident trust estate
• you had a right to acquire an interest in the income or capital of a non-resident trust estate.

If any of the above were the case, print X at the Yes box at question 28a – label A.

Question 28b

Do any of the schedules within PCG 2017/1 apply to your offshore dealings?

The values asked for in this question are all based on your accounting records.

To complete this question:

• Identify all of your offshore dealings that are subject to any of the schedules within PCG 2017/1.
• Add up the value of expenses and imports plus revenue and exports in connection with each Appendix 14 type of hub.
• Determine the 3 Appendix 14 hub types that have the highest dollar value of property or services imported to or exported from Australia (the total value of expenses and imports plus revenue and exports).
• In respect of the 3 Appendix 14 hub types that have the highest dollar value of property or services imported to or exported from Australia, add up the value of expenses and imports in connection with each type of hub according to the Appendix 14 type of hub.
• Add up the value of revenue and exports in connection with each type of hub according to the Appendix 14 type of hub.

Print X at the Yes box at question 28 – label A, if any of the schedules within PCG 2017/1 applied to your offshore dealings, and complete the following:

• At labels B, E and H, write the Appendix 14 codes for the 3 hub types that have the highest dollar value of property or services imported to or exported from Australia (the total value of expenses and imports plus revenue and exports). Write these codes in descending order of total value.
• At labels C, F and I, write the total amount of expenses and imports in connection with each Appendix 14 hub type you have identified.
• At labels D, G and J, write the total amount of revenue and exports in connection with each Appendix 14 hub type you have identified.

Question 29 Cross-border hybrid entities and hybrid instruments

In question 29, complete the following labels at question 29a.

Question 29a

Were you a partner in a foreign hybrid limited partnership (FHLP) or a shareholder in a foreign hybrid company (FHC)?

Question 29a will help us to identify if there is a risk that income of a foreign hybrid limited partnership (FHLP) or a foreign hybrid company (FHC) has not been appropriately returned in Australia as an assessable distribution.

The dollar amounts or values asked for in this question are all based on your accounting records.

FHLP has the same meaning as set out in section 830-10 of the ITAA 1997.

FHC has the same meaning as set out in section 830-15 of the ITAA 1997.

Print X at the Yes box at question 29 – label A, if you were a partner in a FHLP or a shareholder in a FHC.

If you answer Yes at question 29a – label A, complete the following:

• At question 29a – label B, write the number of FHLPs and FHCs in which you had an interest during 2023–24.
• At question 29a – label C, write the total amount of your shares of net income or profit.

Continue to: Section D: Thin capitalisation

Return to: Instructions to complete the international dealings schedule

About thin capitalisation

Section D deals with information about how the thin capitalisation rules in Division 820 of the ITAA 1997 applied to you during 2023–24.

Amendments to Division 820 in the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (Amending Act) introducing a new thin capitalisation regime came into effect for income years starting on or after 1 July 2023.

Substantial updates to Section D reflect those changes.

The new disclosure requirements help us to assess tax risks associated with the new thin capitalisation rules, including questions to assess the impact of the new rules and how the new rules apply to different classes of entities.

The thin capitalisation rules which apply depend on whether your income year starts before or after 1 July 2023. We've therefore designed this year's form to minimise unnecessary duplication and allow for redundant questions to be removed from next year's form.

In particular, early balancers with an income year starting before 1 July 2023 and Australian plantation forestry entities are not affected by the Amending Act. Accordingly, we’ve designed the form so that the thin capitalisation disclosures for these entities are largely the same as previous years.

Question 30a Were the thin capitalisation rules applicable to you?

If the thin capitalisation provisions in Subdivision 820-AA, 820-B, 820-C, 820-D or 820-E of the ITAA 1997 applied to you, print X in the Yes box at question 30a – label A and go to question 31.

If the thin capitalisation provisions in Subdivision 820-AA, 820-B, 820-C, 820-D or 820-E didn't apply to you, print X in the No box at question 30a – label A and go to question 30b.

The thin capitalisation rules were not applicable to you if, for all parts of the income year, the exemptions in section 820-35, 820-37 or 820-39 applied to you.

You must print X in the Yes box at question 30a – label A and go to question 31, if:

• you are an entity that doesn't incur debt deductions for the income year
• sections 820-37 and 820-39 don't apply to you; and
• you and all of your relevant associate entities have total debt deductions exceeding $2 million for the income year.

For more information about the thin capitalisation rules, see Thin capitalisation.

Question 30b Did you rely on the $2 million threshold exemption?

You will not be required to apply the thin capitalisation provisions under section 820-35 of the ITAA 1997 if you and all of your associate entities (within the meaning of section 820-905) have total debt deductions of $2 million or less.

If section 820-35 applies to you, print X in the Yes box at question 30b – label A and go to question 40.

If section 820-35 didn't apply to you, and you answered No to question 30a. You must print X in the No box at question 30b and go to question 30c.

Question 30c Other exemptions

Did you rely on one of the following exemptions in determining the thin capitalisation rules did not disallow any of your debt deductions?

The thin capitalisation provisions don't apply to disallow any of your debt deductions if you meet the conditions in sections 820-37 or 820-39 of the ITAA 1997.

The '90% asset test' in section 820-37 applies if the following is true:

• you are an outward general class investor, an outward investing financial entity or an outward investing entity (ADI) but you are not also an inward investing entity for any part of the year, and
• the total of you and your associate’s average Australian assets is equal to or greater than 90% of the total of you and your associate’s total assets.

If section 820-37 applies to you, print X in the Yes box at question 30c – label A then go to question 39a.

Section 820-39 applies to a special purpose entity. An entity is a special purpose entity where all the following is met:

• the entity is established for the purposes of managing some or all of the economic risk associated with assets, liabilities or investments
• the total value of debt interest in the entity is at least 50% of the total value of the entity’s assets
• the entity satisfies the criteria for an insolvency-remote special purpose entity of an internationally recognised rating agency.

If section 820-39 applies to you, print X in the Yes box at question 30c – label B then go to question 35d.

Question 31 Election under subdivision 820-FB

Question 31 is relevant if you are an Australian resident company that has elected under subdivision 820-FB of the ITAA 1997 to treat their qualifying branch operations as part of a consolidated group, multiple entry consolidated (MEC) group or single company for thin capitalisation purposes.

If you carry on qualifying Australian branch operations that your related Australian consolidated group, MEC group or single company has elected under subdivision 820-FB of the ITAA 1997 to treat as part of itself for thin capitalisation purposes, then you will not be required to complete the remaining thin capitalisation questions. This is because the questions must be completed in the return of the head company or the single company on the basis of including your branch operations.

If an Australian resident company has elected under subdivision 820-FB of the ITAA 1997 to treat your qualifying Australian branch operations as part of its consolidated group, MEC group or single company for thin capitalisation purposes:

• print X at the Yes box at question 31 – label A
• write the ABN of the electing Australian company at question 31 – label B and then go to question 40.

If you do carry on qualifying Australian branch operations that are not treated as part of a consolidated group, MEC group or single company by reason of the operation of subdivision 820-FB, you must complete the following thin capitalisation questions for the branch operations.

Question 32 Entity type for the income year

Question 32 requires you to disclose your thin capitalisation entity type for the income year.

The thin capitalisation rules apply differently depending on the type of entity you are. To work out how the thin capitalisation rules apply to a particular entity we need to know which category the entity belongs to.

The new thin capitalisation rules for income years starting on or after 1 July 2023 introduce a new entity type of 'general class investor' under section 820-46 of the ITAA 1997. This effectively consolidates the following 'general' types of entities under the thin capitalisation rules for income years starting before 1 July 2023:

• outward investor (general)
• inward investment vehicle (general)
• inward investor (general).

An entity is a general class investor under section 820-46 of the ITAA 1997 if the entity is not a financial entity or ADI for all the income year and, if it had been a financial entity during the income year, it would be either:

• an outward investing financial entity (non-ADI) under subsection 820-85(2) of the ITAA 1997
• an inward investing financial entity (non-ADI) under subsection 820-185(2), 820-583(4) or 820-609(6) of the ITAA 1997.

An entity will need to be a financial entity or an ADI for an entire income year to be precluded from being a general class investor for the income year.

At question 32 – label A, write the applicable code selected from the below table for the type of thin capitalisation entity you are for the 2023–24 income year or relevant period.

To work out what type of entity you are, see the relevant provisions in Division 820 of the ITAA 1997.

Entities with an 2023–24 income year that starts before 1 July 2023 (early balancers) don't apply the new thin capitalisation rules for 2023–24. If you are an early balancer and you are not an ADI or investing financial entity for the income year, write code 6 or 7 at question 32 – label A.

Question 32a Financial entity type for investing financial entities

Question 32a requires investing financial entities to disclose their relevant category of financial entity under subsection 995-1(1) of the ITAA 1997 for the income year.

If you were an investing financial entity (code 2 or 3 at question 32 - label A), write the applicable financial entity code selected from the table below at question 32a – label  A.

Code a will not be applicable if your income year started on or after 1 July 2023.

Where more than one type of financial entity code applies to you, choose the code that represents the largest proportion of your business as determined on a reasonable basis.

Question 32b Did thin capitalisation amendments apply in 2023–24

Did the thin capitalisation amendments in the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 apply to you in the income year?

Question 32b ascertains if the new thin capitalisation provisions applied to you for 2023–24.

If your 2023–24 income year started on or after 1 July 2023, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (Amending Act) applies to you for 2023–24. Print X in the Yes box at question 32b – label A then go to question 34.

If your 2023–24 income year started before 1 July 2023 (early balancer), then the Amending Act doesn't apply to you for your 2023–24 income year:

• Print X in the No box at question 32b – label A.
• Print the applicable entity code at question 32b – label B selected from the table below.

If you were an Australian plantation forestry entity for the income year, then the Amending Act doesn't apply to you.

An Australian plantation forestry entity is an entity that solely or predominantly carries on a business of establishing and tending trees for felling in Australia. Australian plantation forestry entities are not covered by provisions in the Amending Act.

If you were an Australian plantation forestry entity:

• Print X in the No box at question 32b – label A.
• Print code 11 at question 32b – label B selected from the table below.

Question 33 Change in entity status for early balancers

Question 33 ascertains if you have changed your entity status from general to financial during 2023–24.

Question 33 only applies if you have answered No at question 32b – label A. The new thin capitalisation rules don't include part-year treatment for general class investors.

The thin capitalisation provisions categorise non-ADI entities as either:

• a kind of financial entity (covered by code 2, 4, 6 or 10 at question 32b – label B)
• a kind of general entity (covered by code 1, 3, 5 or 9 at question 32b – label B).

Print X at the Yes box at question 33 – label A, if you have changed your entity type for thin capitalisation from general to financial during 2023–24.

For more information about the different types of thin capitalisation entities, see the provisions in the Early balancing thin capitalisation entity type table.

Question 34 Method for calculating average values

Question 34 seeks to ascertain your method for calculating average values.

At question 34 – label A, write the applicable code from the table below that represents the type of averaging method you used for calculating 'average values'.

For more information about these methods or 'average values', see Division 820 of the ITAA 1997.

Question 35 General information for all thin capitalisation entities

Question 35 requires information for all thin capitalisation entity types. This question requires entities to disclose debt deductions, interest income and average adjusted debt.

You must complete all questions. However, if you have written code 4 or 5 (ADI) at question 32 – label A, you don't need to complete question 35 – label D (adjusted average debt).

Disclosure of debt deductions and interest income is relevant to calculating the ‘net debt deduction’ amount adopted in the new fixed ratio test and group ratio test.

The disclosure of adjusted average debt is retained for risk assessment and evaluation of the new thin capitalisation rules.

The dollar amounts or values asked for in this question are all based on your tax records.

Debt deductions

At question 35 – label A, write the total amount of your debt deductions allowable before applying Division 820 of the ITAA 1997.

At question 35 – label B, write the amount of your debt deductions for any debt interests or financial arrangements held, relating to or ultimately funded (via a back-to-back arrangement) by a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the debt deductions shown at question 35 – label A were for debt interests or financial arrangements held, relating to or ultimately funded by such non-resident entities, write 0 (zero) at question 35 – label B.

If your 2023–24 income year started on or after 1 July 2023, at question 35 – label C, write the amount of your debt deductions that are disallowed for 2023–24 under the following sections if you have written:

• code 1 at question 32 – label A, the amount disallowed under section 820-50
• code 2 at question 32 – label A, the amount disallowed under sections 820-85, 820-115 and 820-120
• code 3 at question 32 – label A, the amount disallowed under sections 820-185, 820-220 and 820-225
• code 4 at question 32 – label A, the amount disallowed under sections 820-325 and 820-330
• code 5 at question 32 – label A, the amount disallowed under sections 820-415 and 820-420.

If you were an early balancer because your 2023–24 income year started before 1 July 2023, at question 35 – label C write the amount of your debt deductions that are disallowed for 2023–24 under the following sections if you have written (legislative references are to the sections before the amendments made in Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024):

• code 1, 2, 9 or 10 at question 32b – label B, the amount disallowed under sections 820-115 and 820-120
• code 3, 4, 5 or 6 at question 32b – label B, the amount disallowed under sections 820-220 and 820-225
• code 7 at question 32b – label B, the amount disallowed under sections 820-325 and 820-330
• code 8 at question 32b – label B, the amount disallowed under sections 820-415 and 820-420.

Adjusted average debt

At question 35 – label D, write the amount of your adjusted average debt for 2023–24 worked out under subsections 820-85(3) or 820-185(3) as relevant.

For general class investors which have written code 1 at question 32 – label A, work out your adjusted average debt by determining your average adjusted debt on a reasonable basis.

Determining your adjusted average debt on a reasonable basis would involve:

• Including both:
  • Debt capital that gives rise to debt deductions
  • Cost-free debt capital.
• If you are a general class investor, determining adjusted average debt on a basis broadly consistent with subsections 820-85(3) and 820-185(3) of the ITAA 1997 as applicable – for example:
  • Reasonable efforts should be made to exclude the value of associate entity debt as would be required under step 2 of the method statements in subsections 820-85(3) and 820-185(3) of the ITAA 1997.
  • If a general class investor would be an outward investing entity (non-ADI) if it had been a financial entity, subsection 820-85(3) of the ITAA 1997 should generally be followed and reasonable efforts made to exclude the value of controlled foreign entity debt.

Interest income and other amounts covered by paragraph 820-50(3)(b)

At question 35 – label E, write the amount of your interest income or other amounts covered by paragraph 820-50(3)(b) for 2023–24.

At question 35 – label F, write the amount of your interest income, or other amounts covered by paragraph 820-50(3)(b) of the ITAA 1997, derived directly or indirectly (via a back-to-back arrangement) from a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the interest income shown at question 35 – label E was for interest income derived from such non-resident entities, write 0 (zero) at question 35 – label F.

For the 2023–24 income year, determine any amounts covered by paragraph 820-50(3)(b) of the ITAA  1997 on a best endeavours basis.

Question 35a Tax EBITDA information

This new question is not required to be completed by early balancing entities using code 6 or 7 at question 32 – label A (early balancing general class investors).

All general class investors are required to disclose their tax EBITDA calculations for risk assessment and evaluation of the new thin capitalisation rules.

Question 35a requires entities to disclose the steps of the ‘tax EBITDA’ calculation in the new thin capitalisation rules. These disclosures don't require any departure from the legislative calculations.

Modified taxable income or loss

At question 35a – label A, write the amount of the entity's taxable income or tax loss for the income year after making the below adjustments. For an AMIT, other trust or a partnership, write the amount of the net income of the entity after making the below adjustments.

In working out your taxable income or tax loss (or net income), disregard the operation of the thin capitalisation rules and make the following adjustments as relevant:

• Assume that you choose to deduct all of your tax losses for loss years occurring before the income year (and that subsection 36-17(5) doesn't apply to that choice) in accordance with subsection 820-52(1A) of ITAA 1997.
• Disregard Division 207 of the ITAA 1997 to the extent it results in an amount of, or a share of, a franking credit being included in the assessable income of an entity in accordance with subsection 820-52(2) of ITAA 1997.
• If you are an R&D entity that is entitled to a notional deduction for an income year under Division 355 of the ITAA 1997 in relation to your R&D activities, subtract an amount equivalent to the amount of the notional deduction in accordance with subsection 820-52(10) of ITAA 1997.
• Disregard distributions or net income from companies, trusts, partnerships and AMITs that are your associate entities in accordance with subsections 820-52(3), 820-52(6), 820-52(6B) and 820-52(8) of ITAA  1997 as applicable. The total of these disregarded amounts are written at question 35a – label G.

If you had a tax loss for the income year after making the above adjustments, print L in the box at the right of question 35a – label A.

Net debt deductions

At question 35a – label B, write the amount of your net debt deductions for the income year calculated under subsection 820-50(3) of the ITAA 1997. For an AMIT, other trust or a partnership, treat net debt deductions as the debt deductions taken into account in working out the net income of the AMIT, other trust or a partnership in accordance with subsections 820-52(4), 820-52(6A) and 820-52(7) of ITAA 1997 as applicable.

If your net debt deductions determined under the above provisions are a negative amount, print L in the box at the right of question 35a – label B.

Modified depreciation and forestry costs

At question 35a – label C, write the total of the following amounts for the income year added under paragraph 820-52(1)I of ITAA 1997:

• Deductions under Division 40 and Division 43 of the ITAA 1997 (other than deductions for the entire amount of an expense incurred by you) – for example, deductions under Subdivision 40-H of the ITAA 1997 are not added under paragraph 820-52(1)I of ITAA 1997.
• General deductions that relate to forestry establishment and preparation costs unless those costs relate to the clearing of native forests.
• Deductions for certain capital costs of acquiring trees under section 70-120 of the ITAA 1997.

Excess tax EBITDA amount

At question 35a – label D, write your excess tax EBITDA amount for the income year as determined under section 820-60 of the ITAA 1997.

Tax EBITDA

At question 35a – label E, write the amount of your tax EBITDA for the income year as determined under section 820-52 of the ITAA 1997 (being the total of the amounts required to be shown at labels A, B, C and D of question 35a).

Fixed ratio earnings limit

At question 35a – label F, write the amount of your fixed ratio earnings limit for the income year as determined under subsection 820-51(1) of the ITAA 1997 (being 30% of Tax EBITDA required to be shown at question 35a –label E).

Total disregarded amounts

At question 35a – label G, write the total of the following amounts:

• Any amount disregarded under subsection 820-52(2) of the ITAA 1997 – about franked distributions.
• Any amount disregarded under subsection 820-52(3) of the ITAA 1997 − about dividends and non-share dividends.
• Any amount disregarded under subsection 820-52(6) of the ITAA 1997 − about trust distributions and the operation of Subdivision 115-C of the ITAA 1997 and Division 6 of the ITAA 1936.
• Any amount disregarded under subsection 820-52(6B) of the ITAA 1997 − about AMIT distributions and the operation of Division 276 of the ITAA 1997.
• Any amount disregarded under subsection 820-52(8) of the ITAA 1997 − about the operation of Division 5 of the ITAA 1936.

Three highest excess tax EBITDA amounts from a controlled entity

At question 35a – label H, write the following information for the 3 highest excess tax-EBITDA amounts transferred from a controlled entity as calculated for each controlled entity under subsection 820-60(3) of the ITAA 1997:

• At question 35a – labels H1a, H2a and H3a, write the name of the controlled entity.
• At question 35a – labels H1b, H2b and H3b, write the corresponding controlled entity's step 1 amount from subsection 820-60(3).
• At question 35a – labels H1c, H2c and H3c, write the corresponding controlled entity's step 3 amount from subsection 820-60(3) divided by 0.3.

Question 35b General class investor

If you were a general class investor and you entered code 1 at question 32, did you rely on the group ratio test?

Question 35b requires entities which have made a choice to apply the group ratio test under subsection 820-46(3) of the ITAA 1997 for the income year to disclose amounts and other information relevant to applying the group ratio test.

These disclosures don't require departure from the legislative calculations.

If you have written code 1 at question 32 – label A and made a choice under subsection 820-46(3) of the ITAA 1997 to apply the group ratio test for the income year, print X in the Yes box at question 35b – label A.

If you have not printed code 1 at question 32 – label A or you have not made a choice under subsection 820-46(3) of the ITAA 1997 to apply the group ratio test in the income year, print X in the No box at question 35b – label A then go to question 35c.

GR group members

At question 35b – label B, write the number of GR group members in your GR group for the income year within the meaning of section 820-53 of the ITAA 1997.

GR group members with less than zero entity EBITDA

At question 35b – label C, write the number of GR group members in your GR group that had an amount of entity EBITDA that was less than zero for the income year as determined in accordance with section 820-55 of the ITAA 1997.

GR group net third party interest expense

At question 35b – label D, write the amount of GR group net third party interest expense for the income year determined in accordance with subsection 820-54(1).

GR group net profit (disregarding tax expenses)

At question 35b – label E, write the amount of GR group net profit (disregarding tax expenses) for the income year determined in accordance with paragraph 820-55(2)(a).

GR group adjusted net third party interest expense

At question 35b – label F, write the amount of GR group adjusted net third party interest expense for the income year determined in accordance with paragraph 820-55(2)(b).

GR group depreciation and amortisation expenses

At question 35b – label G, write the amount of GR group depreciation and amortisation expenses for the income year determined in accordance with paragraph 820-55(2)I.

GR group EBITDA

At question 35b – label H, write the amount of the GR group EBITDA for the income year in accordance with section 820-55 of the ITAA 1997 (being the total of the amounts required to be shown at labels E, F and G of question 35b).

When working out the GR group EBITDA for a period, if a GR group member for the period of the GR group has an entity EBITDA for the period of less than zero, that GR group member’s entity EBITDA is disregarded under subsection 820-55(3) of the ITAA 1997.

Group ratio

At question 35b – label I, write your group ratio for the income year as determined under subsection 820-53(1) of the ITAA 1997 (being your GR group adjusted net third party interest expense required to be shown at question 35b – label F divided by your GR group EBITDA required to be shown at question 35b – label H).

The group ratio should be provided as a whole number (rounding up or down to the closest whole number) expressed as a percentage. For example, write 40 at question 35b – label I if:

• Your GR group adjusted net third party interest expense at question 35b – label F is $40.
• Your GR group EBITDA at question 35b – label H is $100.
• Your group ratio is worked out as:
  • $40 ÷ $100 = 0.4
  • 0.4 × 100 = 40%.

If your GR group EBITDA is zero, write 0 at question 35b – label I.

You are required to provide a whole number only for reporting purposes at question 35b – label I. When calculating your group ratio earnings limit at question 35b – label J, use your group ratio calculated without any rounding in accordance with the requirements of subsections 820-51(2) and 820-53(1) of the ITAA 1997.

Group ratio earnings limit

At question 35b – label J, write the amount of your group ratio earnings limit for the income year as determined under subsection 820-51(2) of the ITAA 1997 (being your group ratio at question 35c – label I multiplied by your tax EBITDA at question 35a – label E).

Three GR group members with highest entity EBITDA amounts

At question 35b – label K, write the following information and amounts for your 3 GR group members with the highest amount of entity EBITDA determined in accordance with section 820-55 of the ITAA 1997:

• At question 35b – labels K1a, K2a and K3a, write the name of each GR group member with the 3 highest amounts of entity EBITDA.
• At question 35b – labels K1b, K2b and K3b, write the amount of entity EBITDA determined in accordance with section 820-55 of the ITAA 1997 of the corresponding GR group member with the 3 highest amounts of entity EBITDA.
• At question 35b – labels K1c, K2c and K3c, write the amount of adjusted net third party interest expense under paragraph 820-55(1)(b) of the ITAA 1997 of the corresponding GR group member with the 3 highest amounts of entity EBITDA.
• At question 35b – labels K1d, K2d and K3d, write the Appendix 2 jurisdiction code for the tax residency jurisdiction of the corresponding GR group member with the 3 highest amounts of entity EBITDA.

Question 35c Third party debt test

If you entered code 1, 2, or 3 at question 32, did you rely on the third party debt test?

Question 35c requires entities which have made, or are taken to have made, a choice to apply the third party debt test under subsection 820-46(4) or subsection 820-46(5) of the ITAA 1997 to disclose amounts and other information relevant to applying the third party debt test.

These disclosures don't require departure from the legislative calculations and conditions for relying on the third party debt test.

A general class investor (code 1 at question 32 – label A) is taken to have made a choice to use the third party debt test under subsection 820-46(5) of the ITAA 1997 for an income year if section 820-48 of the ITAA 1997 applies to the entity for the income year.

The scenarios in which section 820-48 of the ITAA 1997 applies to the entity for the income year include where the entity:

• is an ‘associate entity’ in the ‘obligor group’ of another entity that has made a choice to apply the third party debt test to a debt interest issued by that entity. section 820-48 of the ITAA 1997 uses a modified definition of associate entity based on a ‘TC control interest’ of 20% or more.
• has entered into a cross staple arrangement with an entity that has made a choice to apply the third-party debt test.

If an entity is taken to have made a choice to apply the third-party debt test under subsection 820-46(5) of the ITAA 1997 for an income year then under subsection 820-47(4A) of the ITAA 1997, the entity can't make a choice under subsection 820-46(3) of the ITAA 1997 to use the group ratio test and any existing choice to use the group ratio test in relation to that income year is revoked and taken to never have been made.

If you have printed code 1, 2 or 3 at question 32 – label A and have made, or are taken to have made, a choice to apply the third party debt test under subsection 820-46(4) or subsection 820-46(5) of the ITAA 1997, print X in the Yes box at question 35c – label A and complete the required labels of question 35c.

If you have not printed code 1, 2 or 3 at question 32 – label A or you have neither made, nor are taken to have made, a choice to apply the third party debt test under subsection 820-46(4) or subsection 820-46(5) of the ITAA 1997, print X in the No box at question 35c – label A then go to question 35d.

At question 35c – label B, print the code indicating the kind of choice to apply the third party debt test that was applicable to you as selected from the table below.

Third party earnings limit

At question 35c – label C, write the amount of your third party earnings limit under section 820-427A of the ITAA 1997.

Credit support rights

Question 35c – label D asks:

Did the holder of a debt interest issued by you that satisfies the third party debt conditions have recourse to Australian assets that were rights that satisfy paragraphs 820-427A(5)(a) and (b)?

Print X in the Yes box at question 35c – label D if the holder of a debt interest issued by you that satisfied the third party debt conditions in subsection 820-427A(3) had recourse to rights meeting the requirements in paragraphs 820-427A(5)(a) and (b) of the ITAA 1997.

Print X in the No box at question 35c – label D if none of the holders of a debt interest issued by you that satisfied the third party debt conditions in subsection 820-427A(3) had recourse to rights meeting the requirements in paragraphs 820-427A(5)(a) and (b) of the ITAA 1997.

Australian assets of other obligor group members

Question 35c – label E asks:

Did the holder of a debt interest issued by you that satisfies the third party debt conditions have recourse to Australian assets held by another member of the obligor group in relation to the debt interest?

This question requires you to identify if there were Australian assets covered by paragraph 820-427A(4)(c) of the ITAA 1997 to which the holder of the debt interest issued by you had recourse.

Paragraph 820-427A(4)(c) of the ITAA 1997 covers Australian assets held by an Australian entity (excluding membership interests in the borrower) that is a member of the obligor group in relation to the debt interest. The meaning of obligor group is provided in section 820-49 of the ITAA 1997 and includes an entity which has assets to which the creditor has recourse for payment of the debt.

Print X in the Yes box at question 35c – label E if the holder of a debt interest issued by you (satisfying the third party debt conditions) had recourse to Australian assets which were held by another member of the obligor group in relation to the debt interest.

Print X in the No box at question 35c – label E if none of the holders of a debt interest issued by you (satisfying the third party debt conditions) had recourse to Australian assets which were held by another member of the obligor group in relation to the debt interest.

Membership interests in the borrower

Question 35c – label F asks:

Did the holder of a debt interest issued by you have recourse to assets that were membership interests in you that satisfy paragraph 820-427A(4)(b)?

This question requires you to identify if there were Australian assets covered by paragraph 820-427A(4)(b) of the ITAA 1997 to which the holder of the debt interest issued by you had recourse.

Paragraph 820-427A(4)(b) of the ITAA 1997 covers Australian assets that are membership interests in the entity (unless the entity has a legal or equitable interest, whether directly or indirectly, in an asset that is not an Australian asset).

Print X in the Yes box at question 35c – label F if the holder of a debt interest issued by you (satisfying the third party debt conditions) had recourse to assets that were membership interests in you that satisfied paragraph 820-427A(4)(b) of the ITAA 1997.

Print X in the No box at question 35c – label F if none of the holders of a debt interest issued by you (satisfying the third party debt conditions) had recourse to assets that were membership interests in you that satisfied paragraph 820-427A(4)(b) of the ITAA 1997.

Minor or insignificant assets

Question 35c – label G asks:

Did the holder of a debt interest, that satisfies the third party debt conditions, have recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c)?

If the holder of a debt interest issued by you that satisfies the third party debt conditions, had recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c) of the ITAA 1997:

• Print X in the Yes box at question 35c – label G.
• Write at question 35c – label H the total value of all minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c) of the ITAA 1997.

Print X in the No box at question 35c – label G if none of the holders of a debt interest issued by you that satisfies the third party debt conditions had recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c) of the ITAA 1997.

Conduit Financing Conditions

Question 35c – labels I to O require entities to provide information in relation to the conduit financing conditions in the third party debt test.

You had a conduit financing arrangement for the income year if both of the following apply:

• all of the conditions in subsection 820-427C(1) of the ITAA 1997 are satisfied in relation to the income year
• you were a conduit financer, conduit borrower or a borrower as defined in subsection 820-427C(1) of the ITAA 1997.

Print X in the Yes box at question 35c – label I if you had a conduit financing arrangement satisfying the requirements of subsection 820-427C(1) of the ITAA 1997 for the 2023–24 income year.

Print X in the No box at question 35c – label I if you didn't have a conduit financing arrangement satisfying the requirements of subsection 820-427C(1) of the ITAA 1997 for the 2023–24 income year, then go to question 35c – label P.

If you were the conduit financer

If you were a conduit financer for the conduit financing arrangement within the meaning of subsection 820-427C(1) of the ITAA 1997, print X in the Yes box at question 35c – label J then go to question 35c – label L.

ABN of the conduit financer

If you were not the conduit financer for the conduit financing arrangement within the meaning of subsection 820-427C(1) of the ITAA 1997:

• Print X in the No box at question 35c – label J.
• Write the ABN of the conduit financer at question 35c – label K.
• Then go to question 35c – label N.

Same terms requirement of a conduit financer

Question 35c – label  L asks:

If you were the conduit financer, did the terms of each relevant debt interest held by you, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest?

In order for the modified third party conditions for a conduit financing arrangement in section 820-427B of the ITAA 1997 to apply, the arrangement must satisfy the condition in paragraph 820-427C(1)(d) of the ITAA 1997 that the terms of the relevant debt interest, to the extent that those terms relate to costs incurred, are the same as the terms of the ultimate debt interest.

Subsection 820-427C(2) of the ITAA 1997 disregards certain terms of a debt interest for the purpose of applying this ‘same terms’ condition in paragraph 820-427C(1)(d) of the ITAA 1997.

If you were the conduit financer within the meaning of subsection 820-427C(1) of the ITAA 1997, and the terms of a relevant debt interest you held, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest:

• Print X in the Yes box at question 35c – label L.
• At question 35c – label M, write the applicable code for the type of terms of the relevant debt interest that were disregarded as selected from the table below.
• Then go to question 35c – label P.

Table: Type of financing arrangements

If you were the conduit financer within the meaning of subsection 820-427C(1) of the ITAA 1997 and the terms of a relevant debt interest you held, to the extent that those terms relate to costs incurred, did not differ from the terms of the ultimate debt interest, print X in the No box at question 35c – label L then go to question 35c – label P.

Same terms requirement of a borrower

Question 35c – label N asks:

If you were not the conduit financer, did the terms of the relevant debt interest issued by you, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest?

In order for the modified third party conditions for a conduit financing arrangement in section 820-427B of the ITAA 1997 to apply, the arrangement must satisfy the condition in paragraph 820-427C(1)(d) of the ITAA 1997 that the terms of the relevant debt interest, to the extent that those terms relate to costs incurred, are the same as the terms of the ultimate debt interest.

Subsection 820-427C(2) of the ITAA 1997 disregards certain terms of a debt interest for the purpose of applying this ‘same terms’ condition in paragraph 820-427C(1)(d) of the ITAA 1997.

If you were the conduit borrower or the borrower within the meaning of subsection 820-427C(1) of the ITAA, and the terms of a relevant debt interest you issued, to the extent that those terms relate to costs incurred, differ from the terms of the ultimate debt interest:

• Print X in the Yes box at question 35c – label N.
• At question 35c – label O, write the applicable code for the type of terms of the relevant debt interest that were disregarded as selected from the table below.
• Then go to question 35c – label P.

Table: Type of financing arrangements

Print X in the No box at question 35c – label N if you are the conduit borrower or the borrower within the meaning of subsection 820-427C(1) of the ITAA, and the terms of a relevant debt interest you issued, to the extent that those terms relate to costs incurred, didn't differ from the terms of the ultimate debt interest. Then go to question 35c – label P.

Cross-staple arrangements

Question 35c – label P asks:

Were you a party to one or more cross-staple arrangements in effect during the income year?

See section 12-436 of Schedule 1 to the Taxation Administration Act 1953 for what constitutes a cross staple arrangement.

Print X in the Yes box at question 35c – label P if you have one or more cross-staple arrangements in effect during the income year.

Print X in the No box at question 35c – label P if you don't have any cross-staple arrangements in effect during the income year.

Obligor group membership

Question 35c – label Q asks:

Were you a member of an obligor group in relation to a debt interest not issued by you?

This question requires you to identify if you were a member of an obligor group within the meaning of section 820-49 of the ITAA 1997.

Section 820-49 provides that you are a member of an obligor group in relation to a debt interest if the creditor of that debt interest has recourse to one or more of your assets (disregarding assets that are membership interests in the borrower) for payment of the debt to which the debt interest relates.

Print X in the Yes box at question 35c – label Q if you were a member of an obligor group in relation to a debt interest not issued by you.

Print X in the No box at question 35c – label Q if you were not a member of an obligor group in relation to a debt interest not issued by you.

Question 35d Special purpose vehicles

Were you or a member of your tax consolidated group, a special purpose vehicle subject to section 820-39 of the ITAA 1997?

In order to evaluate the exemption provided to certain special purpose entities in subdivision 820-AA of the ITAA 1997, question 35d requires certain information if you, or a member of your tax consolidated group, were a special purpose entity covered by section 820-39 of the ITAA 1997.

Print X in the Yes box at question 35d – label A if you, or a member of your tax consolidated group, were a special purpose vehicle subject to section 820-39 of the ITAA 1997 for the income year and complete the required fields.

Print X in the No box at question 35d – label A if neither you, nor a member of your tax consolidated group, were a special purpose vehicle subject to section 820-39 of the ITAA 1997 for the income year, then go to question 36.

Debt deductions

At question 35d – label B, write the total amount of debt deductions of your special purpose vehicle (ignoring the operation of Division 820).

At question 35d – label C, write the amount of the debt deductions of your special purpose vehicle for any debt interests or financial arrangements held, relating to or ultimately funded (via a back-to-back arrangement) by a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the debt deductions of your special purpose vehicle shown at question 35d – label B were for debt interests or financial arrangements held, relating to or ultimately funded by such related non-resident entities, write 0 (zero) at question 35d – label C.

Average debt amount

At question 35d – label D, write the average debt amount of your special purpose vehicle. ‘Average debt amount’ is not as specific as ‘adjusted average debt’. You should calculate the average debt amount of your special purpose vehicle on a reasonable basis.

For example, a reasonable basis for calculating the average debt amount of your special purpose vehicle would be to determine the average quarterly balance of all debt interests on issue by your special purpose vehicle during the income year, regardless of any costs associated with these debt interests, consistently with the below method in the Local File – Part A instructions.

• Add up the amount of:
  • the balance of the borrowing, or
  • the price or value of the debt interest (as relevant)
• based on your accounting records (including the amount of any debt interest treated as equity for accounting purposes) at the start of the year and at the end of each quarter.
• Divide the result by five.
• Only positive amounts should be reported.

Interest income and other amounts covered by paragraph 820-50(3)(b)

At question 35d – label E, write the amount of the interest income or other amounts covered by paragraph 820-50(3)(b) of your special purpose vehicle.

At question 35d – label F, write the amount of interest income, or other amounts covered by paragraph 820-50(3)(b) of the ITAA 1997, derived by your special purpose vehicle directly or indirectly (via a back-to-back arrangement) from a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the interest income shown at question 35d – label E was for interest income derived from such non-resident entities, write 0 (zero) at question 35d – label F.

You can determine any amounts covered by paragraph 820-50(3)(b) of the ITAA 1997 on a best endeavours basis.

Question 36 Authorised deposit taking institutions (ADIs)

Question 36 requires information if you were an authorised deposit taking institution (ADI).

If you were an ADI for the 2023–24 income year and have printed code 4 or 5 at question 32 – label A, print X in the Yes box at question 36– label A and complete the required fields.

If you were an ADI for the 2023–24 income year, print X in the No box at question 36 – label A then go to question 37.

If you have printed code 4 (outward investing entity (ADI)) at question 32 – label A write the following amounts at question 36:

• At label B, write the amount of your adjusted average equity capital worked out under subsection 820-300(3).
• At label C, write your safe harbour capital amount determined under section 820-310. If you have calculated a safe harbour capital amount and relied on the arm’s length method or world-wide capital method, write the amount you calculated for the safe harbour capital amount at label C.
• At label D, write the amount by which your minimum capital amount determined under section 820-305 exceeds the amount of your adjusted average equity capital written at label B.
• At label E, write the amount of the average value of risk-weighted assets that you include in step 1 in section 820-310 (after excluding the value of risk-weighted assets attributable to the assets specified in paragraphs (a), (b) and (c) of step 1 in section 820-310).
• At label F, write the amount of ADI equity capital attributable to your overseas permanent establishments that you were required, under paragraph 820-300(3)(a), to subtract in determining the amount of adjusted average equity capital you had to write at question 36 – label B.
• At label G, write the amount of the average value of your total risk-weighted assets, used to work out your Tier 1 capital reported to APRA for your ADI group, attributable to your overseas permanent establishments that you were required, under paragraph (a) of step 1 in section 820-310, to subtract in determining the amount of the average value of risk-weighted assets you had to write at question 36 – label E.
• At label H, write the amount of the average value of all your controlled foreign entity equity, within the meaning of section 820-890, that you were required, under paragraph 820-300(3)(b), to subtract in determining the amount of adjusted average equity capital you had to write at question 36 – label B.
• At label I, write the amount of tier 1 prudential capital deductions that you include in step 3 in section 820-310.

If you have written code 5 (inward investing entity (ADI)) at question 32 – label A write the following amounts at question 36:

• At label B, write the amount of the average equity capital worked out under subsection 820-395(3).
• At label C, write your safe harbour capital amount determined under section 820-405. If you have calculated a safe harbour capital amount and relied on the arm’s length method, write the amount you calculated for the safe harbour capital amount at label C.
• At label D, write the amount by which your minimum capital amount determined under section 820-400 exceeds the amount of your average equity capital written at label B.
• At label J, write the amount of the average value of all your risk weighted assets attributable to your Australian permanent establishments (but after excluding those assets which are attributable to offshore banking activities) that you include in step 1 of section 820-405.
• At label K, write the amount of the average value of the total amounts you have made available to your Australian permanent establishments, that will never give rise to any debt deductions, that you are entitled to include, under paragraph 820-395(3)(b), in working out the amount of average equity capital you had to write at question 36 – label B.

Question 37 Early balancer non-ADIs and non-financial entities

Question 37 requires information regarding early balancing general entities (you printed code 6 or 7 at question 32 – label A) and Australian plantation forestry entities (you printed code 11 at question 32b – label B).

If you are an early balancing general entity or an Australian plantation forestry entity, print X in the Yes box at question 37 – label A and complete the following required fields.

If you have printed code 1, 2, 3, 4 or 5 at question 32 – label A, print X in the No box at question 37 – label A then go to question 37a.

At question 37 – label B, write the amount of the average value of your assets included in step 1 of the following sections if you have printed:

• code 1 or 9 at question 32b – label B, under section 820-95
• code 2 or 10 at question 32b – label B, under section 820-100
• code 3 at question 32b – label B, under section 820-195
• code 4 at question 32b – label B, under section 820-200
• code 5 at question 32b – label B, under section 820-205
• code 6 at question 32b – label B, under section 820-210.

If you have printed code 11 at question 32b – label B, use the section that applies to you as if you were an early balancer and not an Australian plantation forestry entity.

At question 37 – label C, write the total asset revaluation amount by which your assets have been revalued for thin capitalisation purposes for 2023–24, excluding your financial assets within the meaning of AASB 132 Financial Instruments: Presentation.

The total asset revaluation amount includes any increases in the value of assets which are recorded at fair value in your accounting records net of subsequent depreciations in 2023–24 (this asset revaluation amount must be included in the amount you write at question 37 – label B), which is an increase in the value of your assets that:

• gives rise to an increase in the amount of the average value of your assets, for thin capitalisation purposes, as a result of an upward revaluation in 2023–24, and
• was not reversed in its entirety before or on the next thin capitalisation measurement day following the upward revaluation.

You would therefore include an upward revaluation that had taken place on 1 October 2023, and which has not been reversed as at the following thin capitalisation measurement day on 31 December 2023, where the '3 measurement days method' is used for 2023–24.

An increase in the value of mining rights as a result of an upward revaluation must not be netted off against a decrease in the value of any other assets as a result of downward revaluation. For example, if there was an increase of $18 million in the value of your mining rights as a result of an upward revaluation and a decrease of $15 million in the value of your other assets such as land and buildings as a result of downward revaluations, you show a total asset revaluation amount of $18 million at question 37 – label C (not $3 million).

At question 37 – label D, if you have printed:

• Code 1, 2, 9 or 10 at question 32b – label B, write your safe harbour debt amount determined under section 820-95 (code 1 or 9) or section 820-100 (code 2 or 10). If you have calculated a safe harbour debt amount and relied on the arm’s length method or world-wide gearing method, write the amount you calculated for the safe harbour debt amount at label D.
• Code 3, 4, 5, or 6 at question 32b – label B, write your safe harbour debt amount determined under section 820-195 (code 3), section 820-200 (code 4), section 820-205 (code 5), or section 820-210 (code 6). If you have calculated a safe harbour debt amount and relied on the arm’s length method or world-wide gearing method write the amount you calculated for the safe harbour debt amount at label D.

At question 37 – label E, then write the amount by which your adjusted average debt written at question 35 – label D exceeds your maximum allowable debt determined under section 820-90 (codes 1, 2, 9 and 10) or section 820-190 (codes 3, 4, 5 and 6).

At question 37 – label F, write the amount of the average value of your non-debt liabilities, as defined in subsection 995-1(1), which you must subtract in determining your safe harbour debt amount as follows if you have printed:

• code 1 or 9 at question 32b – label B, subtracted in step 6 of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 6 of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 4 of section 820-195
• code 4 at question 32b – label B, subtracted in step 4 of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 4 of section 820-205
• code 6 at question 32b – label B, subtracted in step 4 of subsection 820-210(2).

At question 37 – label G, write the amount of the average value of your associate entity debt, within the meaning of section 820-910, which you must subtract in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 1 or 9 at question 32b – label B, subtracted in step 2 of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 2 of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 2 of section 820-195
• code 4 at question 32b – label B, subtracted in step 2 of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 2 of section 820-205
• code 6 at question 32b – label B, subtracted in step 2 of subsection 820-210(2).

At question 37 – label H, write the amount of the average value of your associate entity equity, within the meaning of section 820-915, which you must subtract in working out your safe harbour debt amount if you have printed the following codes (note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 1 or 9 at question 32b – label B, subtracted in step 3 of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 3 of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 3 of section 820-195
• code 4 at question 32b – label B, subtracted in step 3 of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 3 of section 820-205
• code 6 at question 32b – label B, subtracted in step 3 of subsection 820-210(2).

At question 37 – label I, write the amount of the average value of your associate entity excess amount, within the meaning of section 820-920, which you must add in working out your safe harbour debt amount if you have printed the following codes ( note that the associate entity threshold relating to associate entity debt for trusts and partnerships has changed):

• code 1 or 9 at question 32b – label B, added in step 8 of section 820-95
• code 2 or 10 at question 32b – label B, added in step 10 of subsection 820-100(2)
• code 3 at question 32b – label B, added in step 6 of section 820-195
• code 4 at question 32b – label B, added in step 8 of subsection 820-200(2)
• code 5 at question 32b – label B, added in step 6 of section 820-205
• code 6 at question 32b – label B, added in step 8 of subsection 820-210(2).

At question 37 – label J, write the amount of the average value of your excluded equity interests, within the meaning of section 820-946, which you must subtract in working out your safe harbour debt amount as follows if you have printed:

• code 1 or 9 at question 32b – label B, subtracted in step 1A of section 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 1A of subsection 820-100(2)
• code 3 at question 32b – label B, subtracted in step 1A of section 820-195
• code 4 at question 32b – label B, subtracted in step 1A of subsection 820-200(2)
• code 5 at question 32b – label B, subtracted in step 1A of section 820-205
• code 6 at question 32b – label B, subtracted in step 1A of subsection 820-210(2).

Question 37 – labels K and L have been retained but it is not anticipated early balancing general entities will be required to disclose at these labels. If you consider that disclosure is necessary, see the instructions for question 37a – labels K and L.

If you have printed code 1,2, 9 or 10 at question 32b – label B, then at question 37 – label M write the average value of all your controlled foreign entity equity, within the meaning of section 820-890, which you must subtract in working out your safe harbour debt amount if you have printed:

• code 1 or 9 at question 32b – label B, subtracted in step 5 of subsection 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 5 of subsection 820-100(2).

If you have printed code 1, 2, 9 or 10 at question 32b – label B, then at question 37 – label N write the average value of all your controlled foreign entity debt, within the meaning of section 820-885, which you must subtract in working out your safe harbour debt amount if you have written:

• code 1 or 9 at question 32b – label B, subtracted in step 4 of subsection 820-95
• code 2 or 10 at question 32b – label B, subtracted in step 4 of subsection 820-100(2).

Question 37a Investing financial entities

Question 37a requires information if you were an investing financial entity (non-ADI).

If you were an investing financial entity (non-ADI) for the income year and have printed code 2 or 3 (non-ADI financial entity) at question 32 – label A, answer Yes at question 37a – label A and complete the following fields.

If you are an 2023–24 early balancing investing financial entity and have written code 2, 4, 6 or 10 at question 32b – label B, disregard references below to the third party debt test as it does not apply to you until your 2024–25 income year starting on or after 1 July 2023.