Reportable Tax position (RTP) schedule is a schedule of the company income tax return which requires large companies to disclose their most contestable and material tax positions.
The RTP disclosure requirement has been significantly broadened for income years ending on or after 30 June 2018. It includes companies in public and international economic groups with a turnover greater than AUD 250 million and they are notified by the Australian Taxation Office (ATO). These companies are required to lodge an RTP schedule. RTP regime is expected to cover approximately 1,100 taxpayers.
ATO use schedule disclosures to:
- tailor their engagement where they focus and work with taxpayers on complex high-risk arrangements
- identify areas where they need to provide further clarification / certainty on the correct treatment of transactions and complex high-risk tax arrangements
- better understand tax risk for taxpayers, industries and the large market
- improve dialogue with large businesses about their risk profile and corporate governance
- allow taxpayers to make informed decisions about positions they have taken or are considering taking that are considered to be high risk arrangements.
A reportable tax position fall into three (3) different types of categories:
- Category A: this is a position that is about as likely to be correct as incorrect, or less likely to be correct than incorrect. This does not include a position where you have exercised reasonable care and concluded in the circumstances, having regard to relevant authorities, that what is argued for is more likely to be correct than incorrect.
- Category B: this is a position in respect of 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. Uncertainty about taxes payable or recoverable exists where there is a difference between your position and the measurement and/or recognition of the taxes payable or recoverable in respect of that position as adopted in your or a related party’s financial statements. A Category B RTP is material if this difference is equal to or exceeds your materiality amount. Taxes payable or recoverable exist where an income tax-related provision, current tax liability (asset) and/or contingent liability (asset) is recognised and/or disclosed in accordance with accounting principles in your or a related party’s financial statements.
- Category C: this is a reportable arrangement. You must disclose a Category C RTP if you answer yes to any of the questions covered by Category C. Note, there are no materiality thresholds for Category C RTPs. Unless otherwise specified, the questions refer to the arrangements and/or transactions taking place in the income year covered by the tax return that your RTP schedule accompanies. RTP Category C is updated throughout the year. We recommend you use the electronic version of this document to ensure that you are reporting on the most up to date list of RTP Category C questions.
ATO have enabled RTP schedule lodgement through the tax agent and business portals. Printing and signing of RTP schedule is not needed when lodge through the portal and a receipt is provided once RTP schedule is lodge.
A webinar on RTP schedule was also prepared by ATO. It provides a concise explanation on how to complete and lodge it. You may click here to access it.
Contact Solve Accountants located on the Gold Coast, Qld Australia if you need help with your RTP disclosure requirements
Source: Australian Taxation Office