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Could an Australian APA be enforced in a court?


An advance pricing arrangement (APA) is generally an arrangement between a taxpayer, the Australian Taxation Office (ATO) and sometimes also a foreign tax authority regarding the income tax treatment of international transactions, agreements or arrangements between related parties or associates. Advance pricing arrangements often represent a compromise between the taxpayer and the ATO where a dispute is resolved by execution of an APA in relation to future years (sometimes bilaterally). Since an APA is a compromise and deals with future years, the outcome may differ from that which would result under arm’s length conditions.

Taxpayers who wish to enforce such agreements against the ATO will find it difficult to do so through court processes. Disputes over APAs are currently resolved by administrative means, importantly including mutual agreement procedure. This article considers whether taxpayers or the Commissioner of Taxation might also be able to bring such disputes before a court.

Author profile

Paul McNab CTA
Photo of author, Paul MCNAB Paul is a Partner and solicitor in the Tax Controversy practice in PwC Sydney. Paul has more than thirty years of taxation experience and has published and spoken on a wide range of taxation issues throughout that period. Over the last 20 years he has had extensive experience in assisting clients understand the tax risks they face and manage their interactions with the ATO. His client base includes some of Australia and the world's largest multinationals and the information technology and telecommunications sectors are particularly heavily represented. His work has included planning for and review of significant transactions (including business value chain transformations), assistance with the assessment and disclosure of tax risk to statutory auditors, management of audits by the ATO and negotiation of settlements and the preparation and conduct of litigation. - Current at 23 February 2017
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