The ATO is set to notify large private companies that they are required to prepare and lodge a reportable tax position (RTP) schedule.
An RTP schedule requires eligible taxpaying entities to disclose their most material and contestable tax positions to the ATO, which the ATO will use for future targeted reviews and audits.
Who is affected?
For income years starting on or after 1 July 2020 the RTP will be rolled out to private companies.
In the first year of effect, the ATO will notify private companies with an RTP reporting obligation. These companies will be identified based on the ATO applying the following criteria:
- private companies that have a turnover of more than $250 million in Australia; and
- private companies that have a turnover of more than $25 million in Australia and are part of an Australian Economic Group that has a turnover of more than $250 million.
For following income years, the expectation is that the ATO intends private companies to self-assess whether they have an RTP reporting obligation. Further guidance will be provided on this after the first year of implementation.
Note: To date, with regard to the same turnover criteria as referenced above for private groups, the RTP schedule is required for public or foreign owned companies.
Tax governance
In line with the ATO’s published views on tax governance, there is an expectation that large private groups will have processes in place to ensure that management and the Board are aware of positions that fall outside the ATO’s guidance. These processes are key to identifying disclosures required on the RTP schedule.
What are the next steps?
For affected taxpayers, urgent action is required to understand the new obligation and ensure evidence and documentation is in place to support tax positions that may require disclosures in their 2021 tax return.
For more information or to determine how this may apply to you, contact a Pitcher Partners representative.
