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28 Oct 1010 Interaction of Division 820 and transfer pricing provisions - TR 2010/7

Taxation Ruling TR 2010/7 was issued on 27 October 2010. It was previously released in draft form as TR 2009/D6. Its full title is "Income tax: the interaction of Division 820 of the Income Tax Assessment Act 1997 and the transfer pricing provisions".

In summary, the Ruling states that "(t)he transfer pricing provisions are applied before the thin capitalisation provisions in determining the deduction allowable for the pricing of debt...Therefore, the transfer pricing provisions apply firstly to require an arm's length consideration for debt funding that is provided on a non-arm's length basis, with the thin capitalisation provisions then operating on the amount of debt deductions determined based on that consideration."


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