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Australian Tax Board Proposes Tax Transparency Code

Monday, May 9, 2016

On May 3, 2016, the Australian Board of Taxation released its final report on a new tax transparency code (TTC) for multinational corporations.

The report divides TTC disclosure into two parts. Part A of the TTC requires a reconciliation of accounting profit to tax expense and to income tax paid or income tax payable; identification of material temporary and non-temporary differences; and accounting effective company tax rates for Australian and global operations.

Part B of the TTC requires taxpayers to provide details about the approach to tax strategy and governance; a tax contribution summary for corporate taxes paid; and information about international related-party dealings.

According to the report, "large businesses" with aggregated TTC Australian turnover of AUD500m or more should adopt Part A and Part B of the TTC, whereas "medium businesses" with aggregated TTC Australian turnover of at least AUD100m but less than AUD500m should adopt Part A of the TTC.

The report stresses that the TTC, in its current form, applies to companies and other entities that are treated as companies for Australian tax purposes. Other entities such as superannuation funds, trusts, and partnerships may voluntarily adopt the TTC if they wish to do so.

Last, the report states that the TTC "will be a minimum standard of content and it is expected that many businesses will provide additional disclosures." The report recommends that the TTC remain voluntary and does not recommend additional oversight or penalties for misleading disclosure of TTC information.