On 17 December 2014, the ATO issued Taxation Ruling TR 2014/8 entitled "Income tax: transfer pricing documentation and Subdivision 284-E".
It was previously released in draft form as TR 2014/D4.
This Ruling sets out the Commissioner's views on the transfer pricing documentation an entity should have kept in order to meet the requirements of Subdivision 284-E of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953). If an entity does not meet these requirements, Division 284 of Schedule 1 to the TAA 1953 (dealing with administrative penalties) will apply as though a matter was not reasonably arguable. Meeting the documentation requirements will mean that an entity is still able to argue that its transfer pricing treatment was reasonably arguable notwithstanding that the position is ultimately found to be incorrect.
This Ruling is part of a package of guidance dealing with transfer pricing documentation. The other publications are:
- Taxation Ruling TR 2014/6 Income tax: transfer pricing - the application of section 815-130 of the Income Tax Assessment Act 1997 (ITAA 1997),
- Law Administration Practice Statement PS LA 2014/2 Administration of transfer pricing penalties for income years commencing on or after 29 June 2013 , and
- Law Administration Practice Statement PS LA 2014/3 Simplifying transfer pricing record keeping .
This Ruling applies to:
- dealings where the actual conditions that operate satisfy the cross-border test under s 815-120(3) of the ITAA 1997 (referred to in this Ruling as 'relevant dealings'). The cross-border test will generally be met where the actual conditions are not purely on a domestic basis, and
- the attribution of profits to permanent establishments (PEs) for the purposes of Subdiv 815-C of the ITAA 1997.
The Ruling applies to income years commencing on or after 29 June 2013 in relation to income tax.