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Transfer pricing regime changes

April 2012

The Treasury has released exposure draft legislation for proposed amendments that will implement the first in a series of planned changes to the operation of Australia's transfer pricing regime. Controversially, the rules are set to apply retrospectively from 1 July 2004.

The most important aspect of the proposed changes is to clarify that the transfer pricing articles in Australia's tax treaties will be applied and operate independently to the general transfer pricing rules. At a practical level, the changes are likely to lead to a greater focus on the profit levels of entities that enter into transactions with international related parties rather than just on the prices applicable to specific transactions.

Other important changes include:

Other important changes include:

  •  It will be necessary to interpret the concept of the 'arms-length' principle as consistently as possible with the relevant OECD guidance at any particular point in time.
  • The allocation of income and expenses of Australian permanent establishments will be compared to results of similar businesses to determine whether the profits from these PE's are consistent with separate and distinct enterprises.

 


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Last updated April 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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