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Even if an Australian company has relatively small operations in Australia, it may still be considered an SGE if it part of a group with large turnover. This is particularly the case when the group is owned by a private equity investor or a superannuation fund. Additionally, depending on exchange rates, the A$1 billion threshold is equivalent to approximately €615 million, meaning the threshold in Australia is lower compared to most jurisdictions.
Importantly, the failure to lodge (FTL) on time penalties for SGEs is 500 times the base penalty. This means that when an “approved form” (such as an Income tax return, Country-by-Country (CbC) reporting statement, Activity Statement etc.) is filed late, the penalties can range from $156,500 (one day late) to $782,500 (more than 112 days late).
Since 2015, the Australian government has been progressively introducing new tax laws targeted at SGEs, including CbC reporting, preparation and lodgment of General Purposes Financial Statements, and specific integrity measures in the form of the Multinational Anti-Avoidance Law (MAAL) and Diverted Profits Tax (DPT).
Watch now as Vince Tropiano, Corporate Tax Partner and Jessica Brass, Corporate Tax Senior Manager, discuss the key issues to be aware of in respect to SGEs.
As the Australian Government continues to focus on the way it taxes Significant Global Entities (SGE), there’s a lot for businesses to navigate to ensure they are meeting all requirements in a coordinated and effective way.
