Australian Local File Solution

In June 2016, the Australian Taxation Office (ATO) finalised the Local File requirements for Country-by-Country (CbC) Reporting in Australia. The Australian Local File requires specific transfer pricing and business information (e.g. local business strategy) to be prepared and reported in a standardised format that will need to be electronically lodged to the ATO.

There is a ‘two tiered’ approach to the Local File:

  • Short Form Local File – available for taxpayers with very small Australian operations and immaterial international related party dealings (IRPDs) that need to satisfy very specific requirements to be eligible
  • (Full) Local File – all other SGEs ineligible for the Short Form Local file will need to complete a (full) Local File which will need to contain all of the Short Form Local file requirements as well as Part A (detailed IRPDs for the income year similar to the IDS) and Part B (copies of agreements, advance pricing arrangements (APAs), TP methods and financial statements for all material IRPDs)

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WHAT DOES IT MEAN FOR ME?

The Australian Local File will need to be electronically lodged with the ATO. The ATO will then perform detailed risk assessments based on the information it receives from taxpayers’ Australian Local File. The information will allow them to reconstruct the IDS disclosures to identify transactions that may warrant further scrutiny. Further, text-based searches of intercompany agreements that are submitted (i.e. in Part B), for example, an agreement that has not been kept contemporaneous may result in further ATO scrutiny.

THE SOLUTION

Local File Data Transformer - Bob the Robot

Local File Data Transformer – “Bob the Robot”

Extract Unstructured Data

Import raw, unstructured data files from your GL, AP/AR or other source systems into Bob

Teach Bob

No need to design complex spreadsheets prone to error and associated risk.  Instead, teach Bob your IDS preparation process including embedding a corporate dictionary of terms and transformation rules. These rules can be easily stored, repeated, reviewed and knowledge transferred to others.

Run Bob

Bob will cleanse, filter, group, summarise and transpose the transactions into the ATO’s prescribed Local File output, automatically populating the disclosures in CCH Integrator.

Collaborate

Bob’s knowledge can be exported and imported between versions of the Bob to make it easy for you and your advisor to easily prepare and review together.


Benefits

  • Easy to use – familiar MS Excel User Interface
  • Machine automation – teach Bob your routine/mundane preparation tasks and Bob will automate them
  • Enhanced accuracy – filter, cleanse, validate, enhance and summarise transactions into ATO’s Local File disclosures
  • Flexible – deals with any source data format
  • Document processes – forces data assumptions stored in the minds of a few to be captured/documented for easy repetition, review and knowledge transfer
  • Risk mitigation and clear audit trail

Local File e-Filing

Data Entry

Review summarised transactions loaded by Bob and collect/store the other attributes for each intercompany transaction in the Local File disclosure

Manage Inter-Company Agreements

The ATO require SGEs to annually disclose intercompany agreements for all material transactions disclosed at Part A.  Corporate tax department’s need to be able to find and disclose all of these agreements to ensure compliance. CCH Integrator’s Australian Local File solution stores these agreements while also submitting them to the ATO.

Validate

Validate the Local File disclosures in accordance with the ATO published rules and e-File with the ATO via SBR.

Electronically Lodge

Integrated with CCH Integrator’s additional solutions, the platform provides a secure, multi-user access to facilitate collaboration, preparation and review across the corporation. Export an XML file to electronically file via the SBR lodgment portal.


Benefits

  • Detailed audit trail
  • Collaboration
  • Document management
  • Validate your work
  • Extend existing value
  • Roll forward and repeat

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