Revised Australian draft legislation for public country-by-country reporting

At a glance

• Revised draft law for comment by 5 March.
• Commencement deferred by 12 months to apply in respect of financial reporting periods commencing on or after 1 July 2024.
• New <$10 million Australian-sourced aggregated turnover threshold.
• Information required to be disclosed is reduced compared to the previous draft law.
• Aggregation of information is allowed for countries unless a country is listed (listed countries include Hong Kong, Switzerland and Singapore).
• Updated penalty section.
• How EY can help.

Revised exposure draft (ED) law for the proposed Australian public country-by-country reporting measures (PCbCR) has been released by Treasury for consultation (12 February 2024, on Treasury’s website here). These additional tax transparency measures were announced in the 2022-23 Federal Budget.

Australia’s PCBCR requires large multinational entities to prepare certain information on a country-by-country basis for public release by the Australian Taxation Office (ATO). The measures will affect both Australian multinational enterprises (MNEs) and foreign owned MNEs for the 2024/25 and later financial years.

This revision follows consultation on the previous April 2023 ED and includes some welcome refinements responding in part to submissions by EY and others, intended to more closely align the Australian requirements with the European Union’s public country-by-country reporting (CBCR) regime.

However Australia’s public CBCR regime will remain the most comprehensive public CBCR regime globally and additional work will be required by covered groups to comply. As currently drafted, the requirements continue to apply to entities that are below the CBCR threshold in their home jurisdiction, but above the Australian threshold.

Revised ED key changes compared to the previous draft:

• The measures apply to financial reporting periods commencing on or after 1 July 2024 (as previously announced).
• Additional threshold – An entity is only subject to reporting if $10 million or more of their aggregated turnover for the income year is Australian-sourced. 
• Information required to be disclosed is reduced compared to the previous draft.
• Aggregation of information is allowed for countries unless a country is designated a specified country (specified countries include Hong Kong, Switzerland and Singapore).
• Updated penalty section, which puts beyond doubt that significant penalties will apply for not providing the required information on time.

The proposed changes are very wide in scope and may apply to many organisations.

As such, they will require careful review to determine their application. Impacted groups will need to ensure systems are in place to comply with these new reporting obligations as heavy penalties can apply for non-compliance.