Tax & Accounting Blog

Tax Office testing of “Effective Tax Borne” methodology

Accounting, Audit & Payroll, Blog August 3, 2015

The ATO has developed an Effective Tax Borne (ETB) methodology and has started a pilot with businesses to test and determine its viability. The methodology provides a standardised approach to identifying an economic group’s worldwide profit from Australian linked business activities, and the Australian and offshore tax paid on that profit.

The ATO said it was encouraging broader discussion about the need for (and appropriateness of) a standardised approach to calculating ETB which will:

  • allow for “like-for-like” comparisons of taxpayers’ effective tax rates; and
  • create a greater level of transparency to build community confidence in the tax system.

The pilot will involve 10 taxpayers. The ATO said it was consulting with stakeholders to refine the methodology and related processes. The ATO said further consultation is likely to follow the initial stages of the pilot to capture the findings and determine how ETB fits within ATO and government directions.

Read the full article in Thomson Reuters Weekly Tax Bulletin (Issue 33, 31 July 2015.)