Executive summary

The Australian Taxation Office (ATO) has issued new materials in relation to Australia's now operative public country-by-country reporting (PCbCR) regime:

• A Draft Law Administration Practice Statement PS LA 2025/D1, published for public consultation on 3 July 2025, sets out the proposed instructions to ATO staff when considering exemption requests from the regime or from particular disclosures.
• A registration form is available for PCbCR parents who will be required to comply with PCbCR.

The PCbCR rules are wide in scope (affecting both Australian groups and foreign groups with Australian operations). Groups must determine whether they are subject to the disclosures and, if they are, should consider whether:

• An exemption request should be submitted to the ATO for the 2025 year
• Sufficient systems and processes are in place to provide the ATO with the necessary information by the due date

The ATO's draft PS LA guidance on exemption requests describes a range of circumstances that the ATO will consider when deciding whether to exercise its discretion to grant either an exemption request or a request for exemption from making particular disclosures. Key elements, discussed further below, include:

• The Commissioner of Taxation (the Commissioner) will exercise his discretion in a limited way to consider only exceptional circumstances that are unusual and disproportionate to the transparency intent of the regime.
• Circumstances that may support granting requests include situations in which disclosure could affect national security, violate Australian or foreign laws or involve commercially sensitive information resulting in significant consequences for the entity, or where the entity's income is below the PCbCR threshold for reporting in the parent entity's jurisdiction but falls within Australia's regime due to exchange rate fluctuations for that period.
• Exemption applications require detailed documentation, as listed in the PS LA. The ATO has developed a standardized exemption application form.

Exemptions are granted on a year-by-year basis; however the ATO may accept short-form applications if there are no changes from the prior year's exemption request.

PCbCR parents seeking exemptions will need to carefully manage the process and their interactions with the ATO. The PS LA anticipates that the ATO will engage with applicants before making a decision, including to request further information where necessary.

PCbCR parents that may want to apply for exemptions should review the draft PS LA and consider providing comments to the ATO by 5 September 2025. Applications may be made before the PS LA is issued in final.

The ATO's PCbCR registration form, though not legally required, helps the ATO manage the regime and engage with affected entities by providing updates and guidance. It also permits a registered Australian tax agent to act as the authorized contact for the PCbCR parent for queries and report lodgment. More details about the form can be found on the ATO website.

The PCbCR measures, enacted in December 2024, apply to financial reporting periods commencing on or after 1 July 2024 with reporting to the ATO within 12 months of year end. For taxpayers with a 30 June 2025 year end, the report is due by 30 June 2026. For taxpayers with a 31 December 2025 year end, the report is due 31 December 2026. The ATO will publish the data on the website https://data.gov.au/.

Draft PS LA on exemptions

The draft PS LA guides ATO staff on granting full or partial PCbCR exemptions for a year. The draft provides advice on how to handle exemption requests but does not limit the decision-maker's discretion; each case is judged individually on its own facts and circumstances.

The draft PS LA outlines:

• Considerations relevant to the exercise of the discretion
• The process for seeking an exemption from PCbCR obligations
• The information that applicants should provide with the application for exemption

Principles to consider when assessing an exemption application

The draft states that the result of granting exemptions should not undermine the transparency and accountability aims of the regime, the integrity of the tax system or the public's trust in the Commissioner's administration and stewardship of the system.

Discretion to grant exemptions will therefore be limited to exceptional circumstances that are unusual and disproportionate to the transparency intent of the regime.

If the information is already in the public domain (or will be), can be readily obtained by the public (e.g., by paying an access fee) or could be deduced from such information, it is unlikely to warrant an exemption. The mere fact that an entity is a private entity or does not have any other public reporting obligations is not in itself a valid circumstance for granting an exemption.

Examples of exceptional circumstances

Examples of circumstances that weigh in favor of granting requests include:

• Situations in which disclosure:
• Would impact national security
• Would breach Australian or foreign laws
• Is commercially sensitive and would result in severe consequences for the entity
• If the entity's income is below the PCbCR threshold in the parent entity's jurisdiction but, due to exchange rate fluctuations, falls within Australia's reporting regime for that period

National security

An exemption from reporting may be granted if disclosing the information affects Australian or other jurisdictions' national security. The ATO provides a list of information types not expected to be disclosed for national security reasons. Simply operating in the defense, intelligence, security or law enforcement sectors is not enough for an exemption.

The draft includes an example in which partial exemptions are given due to Australian national security concerns.

Breach of laws

One factor supporting the granting of a reporting exemption arises if public disclosure of the information would violate an Australian or foreign law (unless the foreign law is designed to impede the operation of Australia's PCbCR). The exemption application must specify the relevant law and the particular reporting obligation, in addition to explaining how the disclosure of that information contravenes that law.

The draft includes a detailed example illustrating instances in which partial exemptions are granted due to concerns regarding violations of laws in a foreign country.

Commercial sensitivity

When considering whether to grant a reporting exemption, the ATO will consider whether the information is commercially sensitive and its public disclosure would result in significant consequences (as judged by an objective standard) for the entity.

Commercially sensitive information is data that could undermine or disadvantage a business or entity if disclosed. The draft includes a list of factors identifying when information is considered commercially sensitive. The ATO also considers that information in reports pertaining to a period that ended up to a year before the report is lodged reduces the consequences of information's being made public. Thus, to request an exemption, detailed explanations of how particular prior-year information could be used against the business is required.

The draft contains a detailed example in which partial exemptions are granted due to commercial sensitivity concerns, and another example in which an exemption is not granted to a private business entity.

PCbCR threshold in other jurisdictions

The ATO will consider granting an exemption if an applicant's income is below the PCbCR threshold in its home jurisdiction, even if it exceeds the Australian AUD$1b threshold.

The draft includes an example in which a full exemption is granted because the CbCR threshold does not align due to the Australian dollar's depreciation against a foreign currency used for compliance measurement.

Form of applications and documentation

Detailed applications for exemption will be required and the PS LA lists the typical documents that the ATO would expect to receive to support exemption applications. The ATO has developed a standardized exemption application form. Entities should register with the ATO prior to lodging an application for an exemption — the registration form is outlined below.

The application must explain the reporting exemption, supported by relevant documents, legislative and legal references and analysis of potential adverse impacts from public disclosure. There should be a clear connection between the information provided and the requested exemption.

The draft includes a non-exhaustive list of the types of evidence required to be provided.

-The ATO recognizes that is important to engage with the applicant before an unfavorable decision is made. If the ATO considers that the information provided by the applicant does not support the exemption and further information is required on matters relevant to the exemption request, the draft instructs the ATO to give the applicant the opportunity to provide that information before making a decision.

Timing of applications

PCbCR parents may apply for an exemption before or after the reporting period ends. Applications can be made before the PS LA is issued in final form. It is important that sufficient time is allowed for the ATO's assessment, including for ATO queries to be addressed so a decision is obtained before the report of information is due. If notification of the exemption application outcome is not received before the reporting due date, entities should apply for a lodgment extension.

Application decisions

The ATO will inform the applicant in writing about its decision to grant a full exemption, partial exemption or no exemption. If only a partial exemption is granted, the ATO must explain the reasons for this decision.

A full exemption removes all publishing obligations for one reporting period. A partial exemption removes some reporting obligations, such as certain pieces of information or information for specific jurisdictions.

Applying for subsequent years

Exemptions apply for one reporting period at a time; therefore an entity that was exempted in a prior year and wants the same exemption going forward must reapply. However, for subsequent applications the ATO advises:

• If information has changed, the entity should provide updated reasoning, documents and financial statements.
• If information has not changed, the entity may submit a statement confirming there are no changes and include updated financial reports if relevant. This submission remains valid for up to two periods after the initial exemption.

Review of decisions

Once an exemption application has been decided for a reporting period, the ATO cannot reconsider that period. There is no right to object to the ATO's exemption decision. Instead, entities will need to appeal the decision in Federal court. The court cannot remake the decision but may remit the decision back to the ATO to remake it according to law. It will therefore be vital that applications are thorough, and applicants engage fully with the ATO during its consideration of the application.

Other exemptions not covered by the PS LA

The draft PS LA does not address the exemption available to Australian government entities in some circumstances (as such entities may be subject to alternative government disclosure or accountability regimes); however these entities can apply for exemptions using the standard exemption application form. The ATO has advised that it will provide further guidance for government-related entities in late 2025.

The draft PS LA does not cover the exemption provided in the law for classes of entities to be exempted by regulation or to be specified in a legislative instrument.

ATO registration form

The ATO has released a registration form and accompanying instructions for PCbCR parents subject to the PCbCR regime.

Though not mandated by legislation, the registration process is intended to support the ATO's administration of the PCbCR regime and to facilitate more streamlined interactions and ongoing engagement with the ATO, including for:

• Providing the PCbCR report to the ATO
• Requesting an extension of time to provide a PCbCR report
• Requesting an exemption from reporting obligations for a reporting period.

All PCbCR parents, whether located overseas or in Australia, can register with the ATO. A nonresident PCbCR parent without a current presence in Australia will be issued an ATO reference number (ARN) as part of this registration process.

The form allows the PCbCR parent to nominate an authorized representative who can satisfy the PCbCR parent obligations. Representatives can include designated officers or employees of the PCbCR parent or a registered Australian tax agent.

The form also requires details of (1) a 100% owned Australian subsidiary of a nonresident PCbCR parent (if there are multiple subsidiaries, then the most significant or relevant entity that derived the majority of the group's Australian-source income is disclosed) or (2) details of a permanent establishment in Australia.

The PCbCR registration form is in a fillable portable document format (PDF), and lodgment is via email to the ATO. Upon lodgment, the ATO will send an email acknowledging receipt.

Managing stakeholders and disclosures

The Australian PCbCR regime is more expansive than the European Union (EU) directive and confidential CbCR under the Organisation for Economic Co-operation and Development (OECD) guidelines.

The reporting form will have a modest character limit to provide the required "approach to tax." The draft does not provide for additional voluntary disclosures to be included in the report to the ATO, which may be needed to help readers understand the information published — e.g., the reasons why a particular jurisdiction may appear to have a low tax burden may not be apparent from what the ATO publishes (e.g. from carry forward tax losses, home country controlled foreign corporation or Pillar Two pickup elsewhere etc.). Groups may therefore want to consider their own additional forms of contemporaneous disclosure to better inform stakeholders. A URL link to these materials might be included in the text for the approach to tax.

Reporting entities should expect scrutiny of the PCbCR by the public, media and nongovernmental organizations, including to compare various PCbCR lodgments and other public financial information to look for inconsistencies. As a result, it will be critical for covered entities to take a coordinated approach to their PCbCR requirements across jurisdictions.

Next steps

Affected multinational enterprises (MNEs) and purely domestic Australian groups will need to ensure that systems are in place to comply with these new reporting obligations. MNEs will need to develop a worldwide approach to comply with other reporting regimes, notably including the EU's CbCR directive enacted by EU Member States.

This additional public reporting will also require covered entities to educate their boards, align this reporting with their current environmental, social and governance (ESG) policies and prepare for transparency to have a potential impact across a wider group of stakeholders, including tax authorities, corporate regulators (in Australia and overseas), investors, short sellers, journalists and nongovernmental organizations.

EY continues to actively consult with the ATO regarding further guidance and clarification on lodgment and filing obligations.

For more information about Australia's PCbCR regime, see our previous EY Global Tax Alerts:

• Australia issues specified jurisdictions for public country-by-country reporting regime, dated 19 December 2024
• Australian public country-by-country reporting Bill progress update, dated 5 August 2024