- Stage 2 of transfer pricing reform introduced into Parliament
The second stage of Treasury’s modernisation of Australia’s transfer pricing rules was introduced into Parliament yesterday.
The second stage of Treasury’s modernisation of Australia’s transfer pricing rules was introduced into Parliament yesterday. Broadly, the new transfer pricing legislation looks to ensure that the application of the arm’s length principle is aligned with OECD guidance and international best practice.
Significant features of the new transfer pricing rules include:
- Alignment with Australia’s overall tax system through operation on a self-assessment basis
- Access to reduced penalties in the event of a transfer pricing adjustment where contemporaneous documentation maintained
- Seven year period for the Commissioner to make amendments to a taxpayer’s transfer pricing position
- The introduction of specific rules allowing the ATO to reconstruct transactions and arrangements
- The arm’s length principle will continue to apply to both associated and non-associated parties
The speed that these changes have passed through public consultation continues to cause us concern. It appears that crucial viewpoints raised by transfer pricing specialists and industry groups have fallen on deaf ears in Treasury due to their priority of pushing the new legislation through Parliament. Given the complex and technical nature of Australia’s transfer pricing regime, this new legislation will continue to cause uncertainty and anxiety in the business community.