Following the notice of the DPT assessment, the taxpayer will be able to provide the Commissioner with further information disclosing reasons why the DPT assessment should be reduced (including to nil) during a period of review (generally 12 months after notice is given of the DPT assessment). If, at the end of that period of review, the relevant taxpayer is dissatisfied with the DPT assessment, or the amended DPT assessment, the taxpayer will have 30 days to challenge the assessment by making an appeal to the Federal Court. However, when considering the appeal, the Federal Court will generally be restricted to considering evidence that was provided to the Commissioner before the end of the period of review. the relevant income year to increase the taxpayer’s liability to income tax. Tax is payable on the increased tax liability at the corporate tax rate. Penalties may apply in addition to the increase in the amount of the tax liability. If the taxpayer is dissatisfied with the amended income tax assessment, the taxpayer has 60 days to object to the assessment (in the manner set out in Part IVC of the TAA 1953). Detailed explanation of new law Schedule 1 to this Exposure Draft Bill introduces the DPT aimed at ensuring that large multinationals are not able to avoid their Australian tax obligations by diverting profits generated in Australia offshore. The Schedule specifies: the circumstances in which the DPT applies to a taxpayer; the consequences that arise if the DPT applies to a taxpayer; and the DPT assessment and review process.
As a result of reviewing the additional information provided by the entity, the Commissioner may conclude that the DPT liability should be increased. In this the Commissioner can issue an amended DPT assessment to increase the DPT liability. If the DPT liability is increased, interest will be payable on the amount of the increase. However, an amended DPT assessment to increase a DPT liability must be issued no later than 30 days prior to the end of the review period. Review of DPT assessments The rights of taxpayers to make a taxation objection against a taxation decision (including an assessment) are set out in Part IVC of the TAA 1953. However, the relevant taxpayer is prevented from making a taxation objection against an assessment of a DPT liability amount in the manner set out in Part IVC during the period of review. [Schedule 1, item 9, section 145-20 of Schedule 1 to the TAA 1953] This ensures that the Commissioner is adequate time to consider information that the relevant taxpayer gives to the Commissioner in the period of review. The relevant taxpayer will be able to make a taxation objection against an assessment of a DPT liability amount in the manner set out in Part IVC within 30 days of the end of the period of review. [Schedule 1, item 9, paragraph 145-20(4)(c) of Schedule 1 to the TAA 1953] The operation of Part IVC in relation to DPT assessments is modified to reflect special features that apply to DPT assessments. The key modifications are that: the taxation objection must be made within 30 days of the end of the period of review; and the taxation objection must be an appeal to the Federal (and not to the Administrative Appeals Tribunal). [Schedule 1, item 9, section 145-20 of Schedule 1 to the TAA 1953] In addition, if an appeal is made to the Federal Court against a DPT assessment, restricted DPT evidence is not admissible in evidence in the proceedings. [Schedule 1, item 9, section 145-25 of Schedule 1 to the TAA 1953] Restricted DPT evidence is any information or documents that the relevant taxpayer does not provide to the Commissioner during the period of review, or that the Commissioner did not already have prior to the period of review. That is, restricted DPT evidence is information or documents that: the relevant taxpayer, or an associate (within the meaning in section 318 of the ITAA 1936) of the relevant taxpayer, had