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Transfer pricing legislation reform – tranche 2: What does it mean for taxpayers?

Published on 01 Aug 13 by "THE TAX SPECIALIST" JOURNAL ARTICLE

In September 2012, the first tranche of Australia’s revised transfer pricing legislation received royal assent as Subdiv 815-A of the Income Tax Assessment Act 1997 (ITAA97). The legislation applies to transactions with treaty countries commencing 1 July 2004 and is applicable to situations where an entity receives a transfer pricing benefit. In 2013, a second tranche was introduced as Subdivs 815-B, 815-C and 815-D ITAA97 and Subdiv 284-E of the Taxation Administration Act 1953. Broadly, the amendments allow the Commissioner of Taxation to replace actual conditions with arm’s length conditions, and provide a legislative basis to apply profit-based approaches to calculate transfer pricing adjustments.

This article summarises the key aspects of the amendments, and examines in detail the likely implications for taxpayers. Examples are provided of transactions that may be at risk of challenge under the new rules. The article concludes with a number of recommended action steps for taxpayers.

Author profiles:

Jesper SOLGAARD
Jesper is a Partner at Ernst and Young. Current at 25 June 2013 Click here to expand/collapse more articles by Jesper SOLGAARD.
 
Author Photo - Paul BALKUS
Paul BALKUS
Current at 15 June 2011 Click here to expand/collapse more articles by Paul BALKUS.

 

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