The Australian Tax Office (ATO) published the final form of the Practical Compliance Guideline (PCG) 2018/5 Diverted profits tax (DPT) and Law Companion Ruling (LCR) 2018/6 Diverted profits tax.
The PCG aims to assist affected clients and their advisors by setting out engagement framework for the DPT and approach to risk assessment and compliance activities where the DPT has been identified as a potential area of concern. The LCR aims to help affected taxpayers and their advisors understand how the DPT law will apply, and to clarify key concepts introduced by the measure.
The DPT applies to DPT tax benefits obtained in income years commencing on or after 1 July 2017, even if the scheme related was entered into or commenced before that time. Where the DPT applies, the Australian Commissioner may make a DPT assessment imposing tax at a rate of 40% on the diverted profit.
