Taxpayers that fail to adhere to their tax disclosure obligations like submitting local file will be exposed to administrative penalties of AUD 4,500. The Government proposes revised penalties amounting to AUD450, 000 from 1 July 2017 for failure to adhere to tax disclosure obligations like non- submitting of local file. According to the new Transfer Pricing documentation standards as encouraged by OECD BEPS Action Plan-13, the tax authorities of Australia aim to release the final Local File “high level design”. Based upon the initial discussion about the final “high level design” document, the ATO has settled on the following “2 tiers” of Local File.
A “short-form Local File” for those with sufficiently small and /or low risks international Inter-company Transactions. The short form Local file will require only qualitative information regarding the local entity. The Local File will require Inter-company Transactions data that is more granular than the current Australian international dealings schedule requirements with foreign APAs and written agreements and rulings for “material” Inter-company Transactions and a “Local file” for all other affected taxpayers.
The Local file will be maintained in an electronic format and the detailed format will be published on the ATO website soon, with instructions to follow. The ATO has also confirmed that the Master File will follow the OECD format and it will release more information in due course around how the Master file will need to be filed.
