RTP schedule expansion to large private companies

This information will assist you in meeting your obligations to lodge a Reportable tax position (RTP) schedule, including your disclosure obligations.

For income years starting on or after 1 July 2020, all companies that meet certain criteria are required to lodge an RTP schedule.

For the first year, large private companies will only need to lodge the RTP schedule if we have notified them of the requirement to do so. The notifications will start to issue in July 2020.

Public and foreign owned companies (including foreign owned private companies) will still need to self-assess against the lodgment criteria in the RTP schedule instructions to determine if they are required to lodge.

If you have questions or require further information, email us at ReportableTaxPosition@ato.gov.au.

Find out about:

Lodgment requirements

You need to lodge an RTP schedule for the 2020–21 income year if we have sent you a notification of the requirement to lodge. We send notifications to private companies that have total business income of either:

  • $250 million or more
  • $25 million or more, and are a part of a private economic group with total business income of $250 million or more..

Total business income will be calculated from the 2019 company tax return and 2019 tax returns of other entities in the economic group. If your company’s income (or its group income) has dropped in the 2019–20 income year, you will still be required to lodge an RTP schedule if you have been notified.

Where your 2019 company tax return has not yet been lodged, we will issue the notification after we receive lodgment (if required).

If your large private company was not sent a notification, it is not required to lodge a 2021 RTP schedule.

We encourage you to update your company’s postal address, as we will send the notification to the postal address held in our system.

For subsequent income years, large private companies will be required to self-assess their lodgment requirement.

Substituted accounting period

Large private companies with an early balancing substituted accounting period (SAP) starting before 1 July, will:

  • not be required to lodge an RTP schedule for 2020–21
  • be required to lodge an RTP schedule for 2021–22 if they are notified
  • be required to lodge an RTP schedule for 2022–23 and subsequent years if they meet the lodgment criteria.

Large private companies with a late balancing SAP starting after 1 July, will be required to lodge an RTP schedule for:

  • 2020–21 if they are notified
  • 2021–22 and subsequent years if they meet the lodgment criteria.

Penalties

The RTP schedule is part of the company tax return and is required to be lodged by the due date of your company’s tax return.

Administrative penalties may apply if you:

  • make a false or misleading statement; this includes omitting information such as not disclosing a reportable tax position
  • fail to lodge on time.

Non-company entities

Entities that are not companies, but who are required to lodge company tax returns, don’t need to lodge an RTP schedule. For example, a corporate limited partnership is not required to lodge an RTP schedule.

How we determine who is notified

This information will help you understand how we determine who is notified. It explains how we apply the definitions of total business income and economic group.

The RTP schedule instructions 2020 include the lodgment criteria definitions and will assist you until the RTP schedule instructions 2021 are available.

Find out about:

Total business income

Total business income is the amount reported at the Total income label of the company tax return. For example, in the 2020 company tax return, total income is reported at label 6S.

The total business income of an economic group is the sum of all income labels in the tax returns of every group member, including trusts and partnerships but excluding individuals.

There is no total income label on the trust and partnership tax returns, so this needs to be added up manually for all income labels.

All Australian income of group members (other than individuals) is included in the calculation. Foreign income of group members is only included where the entity generating the income is an Australian resident entity.

Where an individual holds the ownership interest that connects entities into one economic group, the income on their individual tax return is excluded from group total business income calculations, for the purposes of determining the RTP schedule lodgment obligation of the economic group.

Economic group

An economic group includes all entities (companies, trusts and partnerships, etc) that lodge a tax return under a direct or indirect Australian or foreign ultimate holding company or other majority controlling interest.

This includes all entities under a single ultimate holding company or under the ownership of a single individual, trust or partnership.

Companies with equal ownership

Where a company is owned by a partnership with two equal partners, other entities owned by the partners do not form part of that company’s economic group. In this case, the partnership is the head entity in the economic group.

Other entities owned by the partnership (jointly owned by the partners) form part of your company’s group, but entities owned by the partners outside the partnership do not.

Trusts

Group members need to hold a majority controlling interest in a trust for a trust to be included in your economic group. Generally, this would require your company or a group member to own over 50% of units in a trust.

Companies that are owned by a trust are included in that trust’s group.

Superannuation funds

A super fund is only included in an economic group where one individual is entitled to over 50% of the assets in the fund.

The trustee of a super fund provides services to the super fund; it does not own the fund. Control and group membership of the trustee of a super fund is based on the shareholding in the trustee entity.

RTP disclosures

Information about positions to be disclosed in the RTP schedule.

Category A and B reportable tax positions

To work out what positions must be disclosed as Category A and B reportable tax positions, see Reportable tax position schedule instructions 2020.

Category B – Uncertainty in your entity’s financial statements

Private companies prepare less comprehensive financial statements than public and foreign owned companies and may not consider or report tax uncertainty in their financial statements.

If your financial statements meet the requirements for private companies, you only need to consider what is in the financial statements to determine whether it has a Category B reportable tax position. A position not covered in the financial statements may be a Category A reportable tax position and need to be disclosed.

Category C reportable tax positions

Category C is a list of questions asking your company whether it had a particular arrangement or transaction in place at any time during the income year. For 2020–21, large private companies will need to consider the following planned Category C questions in addition to the questions in the 2020 RTP schedule instructions..

Planned Category C questions for 2020–21

Category C questions relate to the 2020–21 income year and will be included in the RTP schedule instructions 2021.

Some of the questions are about positions taken by other parties in an arrangement your company is involved in. We require disclosure of positions that your company has oversight of, either through the shareholder register or because the company’s officers (as defined in the Corporations Act 2001) are aware of (for example, they have been involved in structuring the arrangement resulting in this position).

We don’t expect you to make further inquiries to identify or confirm the positions of those other parties.

For the purposes of these questions:

  • the term ‘associates’ has the meaning as given in section 318 of Income Tax Assessment Act 1936 (ITAA 1936)
  • a private company is defined in section 103A of the ITAA 1936.
Question 1

If your entity is a private company that is the head entity of a consolidated group, did any of the consolidated group members (including the head entity) make a loan to the head entity’s shareholders or their associates that are external to the consolidated group where:

  • the loan is not compliant with the terms of 109N
  • the loan was not repaid by the lodgment date
  • no statement has been provided to the recipient advising of a deemed dividend?

We are interested in loans made by members of consolidated groups to shareholders (or shareholders’ associates) outside the consolidated group, in the current income year. For more information refer to: Taxation Determination TD 2004/68 and Taxation Determination TD 2018/13.

Question 2

Has your entity been part of an arrangement described by either subcategory below?

Subcategory 1: Your entity has subscribed for a controlling share of units in a unit trust (where they did not own a controlling share in the prior year), which had a debt to another party that was the trust’s associate before the subscription and where the proceeds of the subscription were used to repay the debt?

Subcategory 2: Your entity has or had an associate unit trust which, in the current or four previous income years, transferred assets into a second unit trust relying on CGT rollover relief under Subdivision 126-G of ITAA 1997, and where the unitholding(s) in the second trust has subsequently changed to the extent that it is no longer your associate.

Refer to Taxpayer Alert TA 2019/2. for further guidance.

Enter the relevant subcategory number in the Category C subcategory field. Enter the number 2 if both subcategories apply.

Question 3

If your entity is a private company and more than 10% of your issued shares are owned by a single shareholder acting as a trustee of a trust, do any of the subcategories below apply?

Subcategory 1: There was a change of trustee during the year that was not in connection with a trust split, or your entity does not know if there was a trust split.

Subcategory 2: There was a change of trustee during the year that was in connection with a trust split.

Refer to Taxation Determination TD 2019/14 for further guidance.

Enter the relevant subcategory number in the Category C subcategory field. Enter the number 2 if both subcategories apply.

Question 4

In the current or four prior income years, has your entity, or an entity your entity controls, claimed a full credit or offset for foreign income tax paid where less than 100% of the related foreign income (including capital gains) is included in their Australian assessable income?

Refer to the decision in Burton v Commissioner of Taxation and ATO Interpretative Decision ATO ID 2010/175 for further guidance.

Question 4 covers fact patterns where only part of a foreign capital gain is assessable in Australia, for example because a foreign capital gain is reduced by a capital loss under Division 102 of the ITAA 1997.

Guidance on the expansion of the obligation to lodge a Reportable tax position (RTP) schedule to large private companies.

Leave A Reply