On 23 August 2016, the Australia Taxation Office (ATO) published the tax transparency code (TTC) that contains a set of principles and minimum standards to guide medium and large businesses on public disclosure of tax information. Medium businesses are defined as those with aggregated Australian turnover of at least AUD 100 million, and large business are those with aggregated Australian turnover of at least AUD 500 million.
Although voluntary, the ATO encourages businesses to adopt the TTC to enhance the community’s understanding of their compliance with Australia’s tax laws. This includes entities treated as companies for Australian tax purposes, and foreign multinationals with operations in Australia.
The information to be disclosed includes two parts:
- Part A - recommended for both medium and large businesses:
- 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 (pursuant to AASB guidance)
- Part B - recommended just for large businesses:
- Approach to tax strategy and governance;
- Tax contribution summary for corporate taxes paid; and
- Information about international related party dealings
It is recommended that the TTC be adopted for financial years ending after the date the Board of Taxation issued its final TTC report, 3 May 2016. Once a business makes its TTC report available publically on its website, the ATO is to be notified and the report will be made available on data.gov.au.