On 17 March 2011, the ATO issued Practice Statement PS LA 2011/1, enititled "ATO's Advance Pricing Arrangement Program". The purpose of the Practice Statement is to explain the policies and procedures of the Advance Pricing Arrangement (APA) Program.
This practice statement replaces Taxation Ruling TR 95/23 (Income tax: transfer pricing - procedures for bilateral and unilateral advance pricing arrangements), which was withdrawn with effect from 10 March 2011. That Ruling provided guidance on the ATO's previous APA Program.
In media release No 2011/18, also issued 17 March 2011, the Commissioner, Michael D’Ascenzo, said the new APA processes in the Practice Statement are the result of extensive consultation and co-design with industry on the principles of the program.
“Following recommendations from an independent review commissioned by the ATO, we worked closely with representatives from the accounting profession and the Corporate Tax Association to look at ways to improve the effectiveness and efficiency of the program,” Mr D'Ascenzo said.
The ATO’s APA program has been in operation since 1991 when the ATO and the United States' IRS concluded the world's first APA. APAs allow companies that are members of a multinational group to reach an agreement with the ATO on how to apply the arm’s length principle in their future dealings with international related parties.