ATO finalises instructions for public CBC reporting

The ATO has now finalised its instructions for completing public country-by-country (CBC) reporting for reporting parents or entities. This follows a period of consultation on draft instructions issued in October last year.

The public CBC reporting obligations require large multinational groups with over $10 million in Australian-sourced turnover to report financial and tax information for each jurisdiction in which they operate. The rules apply to reporting periods beginning on or after 1 July 2024, with the first reports due at the end of June.

The instructions published this week contained detailed information on how to complete each of the six sections of the public CBC report, which must be completed in English, using the specified XML Schema.

In the finalised version of the instructions, the ATO added further details on reporting and correcting errors in public CBC reports, including the difference between material and non-material errors.

The instructions said that whether an error is material is a matter of professional judgement.

"The relevant accounting standard must be used to determine whether an error in an item, or an aggregate of items is material and must be corrected," it said.

"An error is material if not correcting it means information is omitted, misstated, or obscured where this could be reasonably expected to influence the fair presentation of your Public CBC report."

The ATO reminded tax professionals that material errors must be corrected within 28 days of the reporting entity becoming aware of the error.

For non-material errors, the ATO said multinational groups could choose to lodge an amendment to their public CBC report to correct these errors.

"The entity may choose to rectify the non-material error by publishing the Public CBC report in the approved form again with the corrected information and using the same Public CBC reporting submission process," the Tax Office said.

"You must complete all fields in the amended Public CBC report, including fields that have not been changed."

The public CBC reporting requirements were passed by Parliament back in November 2024 as part of the government's commitment to ensuring mutational entities pay the correct amount of tax.

Mid-tier accounting firm BDO said public CBC reporting represents a significant shift from compliance to proactive transparency, with significant implications for governance, reputational management and stakeholder trust.

"Multinational enterprises should begin preparations now, focusing on data readiness, internal controls, and strategic communications to meet these new obligations and manage associated risks," the firm said in a recent article.