Updates to the Australian Local File – Short Form Local File What is the change? The Australian Taxation Office (ATO) has introduced significant changes to the Australian Local File (ALF), specifically the Short Form Local File (SFLF). The new instructions apply for reporting periods beginning on or after 1 January 2024.
Current SFLF requirements The Local File has been one of the three statements required to be submitted to the ATO under Australia’s country-by-country (CbC) reporting regime. Historically, taxpayers were required to provide an SFLF attachment, in which CbC reporting entities (CbCREs) disclosed specific information about their Australian operations, specifically in response to the following five questions: 1. Organisational reporting structure, including overseas reporting lines for local functions. 2. Business and strategy. 3. Business restructures, including significant changes in ownership structure, related party funding arrangements, assets, or operations. 4. Transfers of intangibles, including associated related party licensing or service arrangements. 5. Key competitors.
New SFLF requirements While the focus remains on the five areas noted above, there are now detailed and prescriptive questions which taxpayers must complete, with an enhanced focus on details relating to business restructures and intangible related transactions. The new Local File and Master File XML schema (LCMSF) reflects the ATO’s focus on obtaining more detailed and structured information to better detect higher-risk international tax and transfer pricing arrangements. For taxpayers that are CbCREs, the new SFLF introduces 50 new questions. Some of these questions need to be answered multiple times if there are multiple business lines, offshore reporting lines, or restructures involving different counterparties. These have been summarised in the following pages.
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