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Extending the definition of a Significant Global Entity (SGE)

Key documents

The Government announced in the 2018-19 Budget that it was extending the definition of a Significant Global Entity (SGE) to include members of large business groups headed by proprietary companies, trusts, partnerships and investment entities.

A Significant Global Entity (SGE) is a concept to define, generally speaking, a group of entities, interrelated by a control relationship that could enable non-arm’s length dealings and therefore be of special interest to tax authorities.

Originally devised to determine application of OECD Country by Country reporting requirements, the SGE definition is now also used to determine application of the Multilateral Anti-Avoidance Law, the Diverted Profits Tax and penalties applying to false or misleading statements, late lodgement or tax schemes. Also SGEs are required to prepare general purpose financial statements where a non-SGE would only be required to prepare special purpose financial statements.

The current SGE definition however only includes groups headed by listed companies and private companies required to prepare general purpose financial statements. By extending the definition, the proposed legislation will ensure the multinational tax avoidance rules apply to all relevant entities.

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