Australia’s diverted profit tax clarified in new guidance

The Australian Taxation Office (ATO) on December 18 published two sets of guidance further clarifying it’s a diverted profits tax on large multinationals. The tax has been in effect since July 1, 2017.

First announced in the 2016-17 budget, Australia’s diverted profits tax aims to prevent multinationals from diverting Australian profits offshore through arrangements involving related parties.

A draft law companion guideline provides guidance on some of the concepts that are included in Schedule 1 to the Act. Comments on this draft guidance are due February 16.

A law administration practice statement discusses the administrative process the ATO uses when making a diverted profits tax assessment.

Multinationals with annual global income of AUS 1 billion (~USD 748 million) that have Australian turnover of more than AUS 25 million (~USD 18.7 million) are subject to the tax.