Global Daily Tax News, Australia Warns Groups On CFC Disclosure Rules, (Jul 28, 2025)

The Australian Taxation Office has issued a warning to privately owned and wealthy groups regarding high error rates in controlled foreign corporate disclosures.

The ATO noted, "Australian resident taxpayers (e.g. the head of a group of companies) must apply the CFC provisions if they have a controlling interest in a foreign company. If this applies to you, you need to disclose all CFCs, and their income, in tax returns and the international dealings schedule (IDS)."

"We monitor private group compliance through a review program, where we're regularly seeing incorrect disclosures that highlight knowledge gaps around the CFC provisions."

The ATO has said it is frequently encountering the following errors:

• under-reporting of CFC attributable income in tax returns, often from errors in applying the active income test, or from failing to recognize tainted income;

• deemed dividends from unlisted country CFCs omitted from the taxpayer's assessable income; and

• incorrect IDS disclosures, including:

  • completely overlooking CFCs including where there is associate-inclusive control; and

  • inaccurate reporting of CFC gross revenue and the number of CFCs acquired and disposed of.

The ATO said: "Private group compliance continues to be a key focus of our Tax Avoidance Taskforce. You need to lodge correct information, otherwise you're risking lengthy review processes and costly amendments, so it's important to check you're complying."