Requirement to lodge Reportable Tax Position schedule 2021 (RTP) schedule expanded to Large Private Companies
Large private companies notified by the ATO will be required to lodge the Reportable Tax Position schedule 2021 financial year.
The ATO will send notifications to private companies that have total business income for 2019 income years of either:
- $250m or more, or
- $25m or more, and are a part of a private economic group with total business income over $250m.
Total business income will be based upon the 2019 company tax return and 2019 tax returns of other entities in the economic group. A company notified by the ATO will be required to lodge an Reportable Tax Position schedule 2021, even if the company or group’s income has dropped in the 2019/20 income year.
Read more about Tax Penalties for Significant Global Entity.
Public and foreign owned companies (including foreign owned private companies) are required to self-assess the need to lodge the Reportable Tax Position schedule 2021 income year. From the 2021/22 income year, large private companies will also be required to self-assess their lodgement requirement.
What is a Reportable Tax Position (RTP) disclosure?
The ATO since 2011 has required a segment of larger companies to self-assess and disclose tax positions in 3 categories (A. B and C) that:
- Category A – have amounted to a material position taken that is more likely than not to be correct;
- Category B – material positions in respect which uncertainty about taxes payable or recoverable is recognised and/or disclosed in the taxpayer’s financial statements or a related party’s financial statements; and
- Category C – specific reportable arrangements that have been listed by the ATO (not necessarily material).
For Category A and B RTPs, the materiality threshold is 5% of the company’s Australian current income tax expense, calculated in accordance with accounting principles (generally, Australian Accounting Standards).
Where 5% of the Australian current tax expense exceeds AUD 30 million (i.e. current tax expense is greater than $600 million) the materiality threshold is AUD 30 million. Where 5% of the Australian current tax expense is less than AUD 3 million, or there is no Australian current tax expense, the materiality threshold is AUD 3 million.
Read more info on New Corporate Tax Transparency Measures.
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.
More significant penalties apply for those companies that are regarded as Significant Global Entities, where the penalty is AUD 105,000 for each 28 days a lodgement is overdue, for up to five months and similarly for omissions and false and misleading statements.
The identification and assessment of RTPs in accordance with ATO guidelines is a potentially time consuming and difficult task. There will need to be careful consideration of positions and compliance with questions in each of the categories, and extra care should be taken in complying with the RPT schedule disclosures due to the potential for penalties.