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The smoke and mirrors around the "stage one" transfer pricing reforms


Despite vocal and significant criticisms from the tax community, the government is proceeding with the introduction of new, retrospective (going back to 1 July 2004) “treaty equivalent transfer pricing rules”. If the rules are enacted, taxpayers could face transfer pricing adjustments in respect of the last eight years, despite having complied with the law as it existed at the time the tax returns for those years were prepared. While the government claims that this is “clarification” of parliament’s previously expressed intention, taxpayers and the broader tax community strongly disagree.

This article covers the background to the new rules, both sides of the two key issues — “clarification” and the existence of “parliament’s intention” — and provides a view on whether the retrospective operation of the new rules is justified. The article concludes with the authors’ prediction on what is likely to happen next.

Author profiles

Peter Collins FTI
Peter is a specialist in international tax at PwC, assisting foreign investors to structure their Australian investments and Australian corporates who are expanding offshore. He works with the firm’s global tax network to develop solutions for clients and is the leader of the Australian firm’s International Tax Services group. Peter is a member of the Australian Treasury’s BEPS Tax Advisory Group and participated in the G20 BEPS Tax Symposium and the BCA BEPS workshop in 2014. - Current at 18 August 2016
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Piotr Klank CTA
Piotr Klank is a Barrister at Ground Floor Wentworth, specialising in tax. He has over 10 years' experience advising on tax and commercial matters in major law firms, a global accounting firm and as an in-house tax advisor. Piotr has a particular interest in international taxation and has assisted multinational taxpayers on disputes involving cross-border financing, hybrid instruments, PEs and transfer pricing. - Current at 04 November 2016
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Lyndon James ATI
Lyndon is a Partner at PricewaterhouseCoopers. - Current at 01 July 2012
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