In brief
The Australian Taxation Office (ATO) has released draft guidance (PS LA 2025/D1) outlining its proposed approach to granting exemptions from the new public country-by-country (CBC) reporting obligations. The public CBC reporting regime, commencing for reporting periods starting on or after 1 July 2024, requires certain large multinational groups to publicly disclose selected tax and financial information for Australia, specified countries, and the rest of their global operations. The ATO’s draft guidance provides clarity on the principles guiding the Commissioner’s discretion to provide a full or partial exemption from the reporting obligation and the process for applying for an exemption.
In detail
Australia’s public CBC reporting regime is designed to enhance tax transparency by requiring certain large multinational entities to publish specific tax and financial information. The regime broadly applies to entities that are part of a CBC reporting group with annual global income of at least AUD$1bn and with Australian-sourced income of AUD$10m or more. The information must be provided to the ATO in an approved form within 12 months after the end of the reporting period, and the ATO will facilitate publication on a government website.
For further information on the reporting requirements, see our earlier Tax Alert.
Availability of exemptions
The Commissioner of Taxation has the discretion to grant either a full or partial exemption from public CBC reporting obligations:
Full exemption: The entity is released from all public CBC reporting obligations for a single reporting period.
Partial exemption: The entity is exempted from publishing some, but not all, of the required information, or from publishing information relating to particular jurisdictions, for a single reporting period.
The Commissioner may also exempt classes of entities by regulation or legislative instrument, but the draft guidance focuses on exemptions for individual entities.
Key principles for assessing exemptions
The draft guidance contained in PS LA 2025/D1 is intended to support ATO staff in assessing applications for exemptions from the public CBC regime. As such, it sets out a range of factors that will be considered when deciding whether to grant an exemption. The discretion is intended to be exercised only in exceptional circumstances and is expected to be exercised in limited circumstances, as evidenced by comments in the Explanatory Memorandum (EM) that accompanied the Bill which introduced the regime.
The principles set out in the guidance largely follow and expand upon the matters that were set out in the EM. There is a heavy focus on ensuring that exemptions do not undermine the purpose of the regime and the policy intention, which is stated to be to enhance tax transparency to help the public better assess an entity’s economic presence in a jurisdiction and how this aligns with the entity’s tax position in that jurisdiction. The guidance notes specifically that it was a design choice not to provide a carve out for private groups. Similarly, there are no exemptions contemplated for Australian headquartered groups with no foreign operations, consistent with the EM. As such, the draft PSLA states that the result of granting exemptions should not undermine the transparency and accountability aims of the regime, the integrity of the tax system, nor the public’s trust in the Commissioner’s administration and stewardship of the system.
Exemptions are expected to be granted only where there are ‘exceptional circumstances’ - that is, unusual or significant circumstances that make disclosure inappropriate. A reporting entity may seek an exemption on any grounds; however, the following examples are provided of the kinds of matters that would be appropriate to consider:
Impact on national security - that is, Australia’s defence, security, international relations or law enforcement interests. The national security of other jurisdictions may also be a relevant consideration. The fact that a reporting group operates in, or with, the defence, intelligence, security or law enforcement industries or sectors will generally not be sufficient, on its own, to warrant an exemption. However, information that would reveal, for example, the location of secret defence, intelligence, security or law enforcement assets or personnel, would not be expected to be publicly disclosed.
Breach of Australian law. The draft guidance notes that if public disclosure of the information conflicts with a law of a state or territory, the disclosure requirements of the public CBC regime will prevail. However, the reasons for prohibition of disclosure under those laws should be taken into account in considering an exemption.
Breach of the law of another jurisdiction. It is noted that if a foreign law has been designed to frustrate the operation of Australia’s public CBC regime, this would detract from whether exceptional circumstances genuinely exist for granting an exemption. Where an entity has an exemption from a similar public CBC regime in another jurisdiction, this does not guarantee an exemption will be granted in Australia.
Disclosure of genuinely commercially sensitive information that would result in severe consequences for the entity. The onus is on the applicant to provide reasons and evidence of the severity of the consequences that will arise from public disclosure. It is also noted that for this reason to be considered, the ‘disclosure of the information must rise beyond the level of harm already contemplated by parliament in implementing the reporting regime. That is, the fact that a reporting entity or group is privately held, or does not have any other public reporting obligations, will not be sufficient.’ The ATO is unlikely to grant exemptions where the detriment is remote or hypothetical only, or where it is based on a reader misunderstanding or misinterpreting information.
The guidance notes that the existence of any of these matters does not automatically entitle an entity to an exemption, and the absence of them does not preclude the discretion being exercised. A number of examples are provided in the draft guidance to illustrate the approach that should be taken to assessing exemption applications.
A relevant factor in assessing applications is whether the information would be aggregated with other information and effectively disguised. Additionally, if the information is already in the public domain (or will be), can be readily obtained by the public (for example, by payment of an access fee) or could be deduced from such information, it is unlikely to warrant an exemption.
The guidance also indicates that positive weight would be granted to an exemption request where, due to exchange rate fluctuations, a reporting group is below the revenue reporting threshold in the parent's jurisdiction that has a public CBC regime, but above the AUD$1bn annual global income threshold under Australia’s regime.
The process for seeking an exemption
Applications for exemptions can be made in writing before or after the end of the relevant reporting period, but only one application will be considered per period.
The ATO has indicated that further instructions on how to apply for an exemption will be provided in due course, including a specific exemption application form. Entities are encouraged to register prior to seeking an exemption. Broadly, the application should include:
a detailed explanation of the grounds for exemption
supporting documents and evidence (e.g., contracts, financial statements), and
specifics on which information or jurisdictions the exemption relates.
As noted above, the onus is on the applicant to provide clear reasons and supporting evidence for the exemption. General assertions or routine business concerns are unlikely to be sufficient.
The ATO may request further information before making a decision. Applicants will be given an opportunity to address any deficiencies before an adverse decision is made. This is important as the ATO has no power to reconsider its decision if the applicant is unsatisfied with it, nor is the decision not to grant an exemption one to which a taxpayer may object. If an entity is not satisfied with an exemption decision, they may appeal to the Federal Court of Australia for a review of the administrative decision, however, the court cannot remake the decision, it can only remit the decision back to the ATO to remake according to the law.
The process to seek an exemption will be annual since the law only permits the Commissioner to grant an exemption for one reporting period at a time. If circumstances remain unchanged, a streamlined process may be available for up to two subsequent periods, but updated evidence may be required.
Consultation process
The draft PSLA has been released for consultation. Feedback can be submitted to the ATO in writing by 5 September. Entities with particular circumstances not currently considered in the draft guidance may wish to provide feedback during the consultation period.
The takeaway
The ATO’s draft guidance provides clarity on how exemptions from public CBC reporting will be considered and granted. Exemptions will be rare and require strong, specific justification supported by evidence. Multinational groups subject to the regime should review their operations, assess whether exceptional circumstances may apply, and prepare robust applications if seeking an exemption. Early engagement with the ATO and careful documentation will be key to navigating the new requirements and minimising compliance risks.
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