The ATO advises that the schedule will apply to income years
starting on or after 1 July 2011.
This new disclosure obligation will mean that taxpayers will be
required to overly highlight their own tax exposures on an annual
basis – rather than the ATO requesting information on a
The ATO will provide a written notification to taxpayers who are
required to complete the schedule. It appears that the ATO
will roll out the schedule to the taxpayers in the "larger end
This will mean that affected taxpayers will have to identify any
reportable tax positions and disclose them to the ATO. The
ATO defines reportable positions to include:
a material position that is more likely to be incorrect.
Presumably taxpayers will be exposed if they make an erroneous
assessment in relation to the degree of "correctness" in
relation to a particular tax position;
a position in respect of which uncertainty about taxes payable
or recoverable is recognised and/or disclosed in the taxpayer's
or a related party's financial statements. In the US,
reporting entities may be required to disclose uncertain tax
positions under Fin 48. It is noted that this accounting
treatment/disclosure is not currently yet required in Australia;
a transaction (the "reportable transaction") in
respect of which both of the following apply:
the taxpayer recognises more than A$200 million of income in
their financial statements for the current income year and treats
less than 50% of such income as assessable income in the current
income year; and
the transaction involved a change to the effective ownership or
control of an entity (or entities), business (or businesses) or
asset (or assets).
Taxpayers must provide the following for each tax position they
A statement describing the facts that underlie the position
they have taken;
The basis for their position - that is, the relevant case law,
legislative references and/or ATO view they relied on to support
the tax position they have taken;
Related party involved - this is a Yes/No question to establish
whether the tax position they have taken is in relation to a
related party transaction; and
Reportable transaction involved - this is a Yes/No question to
establish whether the tax position they have taken is in relation
to a reportable transaction as defined above.
The schedule will represent a new approach in the type of
information required to be disclosed in tax returns and
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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