The Australian Taxation Office (ATO) announced updates to its country-by-country (CbC) reporting exemptions on 29 November 2024.
These updates bring changes to previous exemptions for the local file, master file, and CbC report. For example, exemptions will apply only to the CbC report, with master file exemptions permitted in limited circumstances, while local file exemptions have been entirely removed.
The following approach applies to all Country-by-Country (CBC) reporting exemption requests received from 1 January 2025.
There is generally no administrative relief available for the local file with respect to reporting periods starting on or after 1 January 2024.
The representations made in all exemption requests must be factually correct. Taxpayers are required to:
- Articulate how they meet the circumstances of the exemption category for which they are applying and set out all the relevant facts or circumstances.
- Reference the relevant source materials to support the analysis and conclusions and provide this source material in the exemption application.
- Articulate and provide source documents in support of the entity that is the ultimate parent entity or CBC reporting parent of the CBC reporting group in the application.
If any entity requests an exemption, they must ensure that any representations of the facts and circumstances are consistent with the disclosures in the associated tax returns and financial statements prior to lodging the exemption application. Additionally, ATO will apply an evidence-based approach in reviewing and approving requests.
Exemptions for CBC reporting statements
Exemptions for CBC reporting statements are available in 3 prescribed circumstances. Taxpayers can request an exemption by outlining how their circumstances align with those described in the exemption categories below and provide the relevant substantiating evidence.
As of 1 January 2025, three specific exemption categories will be available for requests. These are as follows:
| Exemption category | Exemption available |
| An Australian CBC reporting parent, or a member of a group consolidated for accounting purposes with an Australian CBC reporting parent, where the group has no foreign operations. No foreign operations means no constituent entity or permanent establishment outside Australia. | CBC report |
| The annual global income of a foreign CBC reporting parent is AUD 1 billion or more but falls below the CBC reporting foreign currency threshold in the jurisdiction of the foreign CBC reporting parent. | CBC report |
| A CBC reporting entity in the preceding year due to membership of a group of entities but left that group during the CBC reporting year due to a demerger or sale to a third party and will not be a CBC reporting entity under your new structure for the foreseeable future. | CBC report and master file |
Other exemptions for the CBC report, master file and local file may be available in exceptional circumstances after a review of the facts and circumstances and consideration of the evidence.
In principle, these exemptions will be limited to circumstances:
- that are not covered by exemptions 1–3, outlined above
- where granting an exemption is necessary to ensure conformity with the OECD Action 13 recommendations.
If the circumstances are exceptional and there is a need to apply for an exemption, one must provide in a request evidence that substantiates the claims alongside citations of the relevant sections of the OECD BEPS Action 13 report.
An absence of international related party dealings or internal dealings will not be sufficient for either a local file or master file exemption to be granted. These exemptions will be granted in very limited circumstances and the overarching expectation is that the master file and local file will be lodged.
