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Australia Shakes Up Transfer Pricing and GAAR Rules 

Global Tax Adviser


August 27, 2013


Recent tax changes in Australia may have important consequences for Canadian businesses doing business in this country. Specifically, Australia has enacted new transfer pricing rules and changed the criteria for its tax avoidance test.

New transfer pricing rules
Australia has enacted new transfer pricing rules that apply to the transactions of all multinational entities operating in Australia, effective for tax years starting on or after July 1, 2013. The new transfer pricing rules grant broader authority to the Australian tax authorities and focus more on the arm's-length profit for an Australian taxpayer (as compared to the arm's-length price under the old rules). In addition, transfer pricing adjustments under the new rules can only be made within seven years of the original assessment (previously there was no time limit).


With its new authority, the Australian tax authorities can investigate "loss makers" and "reconstruct" a transaction when the actual transaction differs from the transaction that would have occurred between unrelated parties.


Taxpayers must self-assess and decide whether they have complied with the new transfer pricing rules before filing their tax returns. Specifically:


  • If profits are too low, taxpayers may need to increase their taxable income
  • If profits are too high, taxpayers can decrease their taxable income.


General anti-avoidance rule
Australia's recent amendments to its tax avoidance test make "purpose" the key criterion, rather than "counterfactual" nor the "tax benefit."


For more information, contact your KPMG adviser.






Information is current to August 27, 2013. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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