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Draft Tax Ruling TR 1999/D16 - Income Tax: international transfer pricing - transfer pricing and profit reallocation adjustments

Published on 01 Feb 00 by THE TAX INSTITUTE

Joint Comments prepared on behalf of the Institute of Chartered Accountants in Australia, the Australian Society of CPAs, the Taxation Institute of Australiaand the Australian Taxpayers Association on Draft Tax Ruling TR 1999/D16 Income Tax: international transfer pricing - transfer pricing and profit reallocation adjustments, relief from double taxation and mutual agreement procedure. The situation was raised of an audit where the ATO adjusts the Australian parent company position to, say, increase royalty income from foreign subsidaries. The subsidiaries are resident in the UK, Netherlands, Ireland, Spain and Portugal. No mention has been made in the draft in relation to adjustments to the foreign subsidiaries to increase royalty payment deductions, where the foreign subsidiariesare in a loss position. The ATO amendments should logically increase the local tax losses of each company.

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