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Further changes to the transfer pricing regime

December 2012

The Government has released exposure draft legislation for another series of changes to Australia's transfer pricing rules. These proposed changes are aimed at aligning Australia's transfer pricing rules with international best practice including the standards and guidance set by the OECD.

While some changes to the transfer pricing system were introduced earlier in 2012 to deal with situations where taxpayers had dealings with countries within Australia's tax treaty network, this batch of legislation will introduce a single set of rules for both tax treaty and non-tax treaty cases. The rules will also apply the arm's length principle to dealings between related parties and non-related parties.

Other key features of the proposed changes include:
  • The new rules will contain further guidance on the treatment of permanent establishments and the allocation of income and expenses to a permanent establishment.
  • The rules will apply on a self-assessment basis (rather than relying on the Commissioner making a determination).
  •  If documentation is not prepared or maintained to explain the application of the rules to a particular taxpayer, they will not be able to show that they have a reasonably arguable position in connection with the transfer pricing rules. This means they will be unable to access lower administrative penalties.

For more information about these proposed changes, please contact

Matt Zhou

on 02 9957 4033.



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Last updated December 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.




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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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