What is transfer pricing?

Transfer pricing is the pricing of assets/services, etc within an organisation. The term usually refers to prices on cross-border transactions within multi-national entities, e.g. from a parent company to a foreign subsidiary. Since the prices are controlled within an organisation, a price that appears to reflect market pricing to you may not be viewed as an “arm’s length” price by a tax authority.

Tax authorities review pricing methods to ensure profit shifts are not detrimental to the tax revenue of each country.

Transfer pricing legislation affects companies, partnerships, sole traders, and permanent establishments who conduct business cross border with Australia as resident entities (or deemed residents under Australian income tax law and various double tax treaties with other countries).

For more information about Grant Thornton’s transfer pricing services, contact:

Chris Bowman, Lead Director International Tax Transfer Pricing Practice (NSW)

Garvin Adair, Associate Director, Transfer Pricing Practice (VIC)

Peter Godber, National Leader Taxation Services (QLD)

Geoff Lloyd (SA)