Global

Details

  • Service: Tax, Global Transfer Pricing Services, International Tax
  • Type: Regulatory update
  • Date: 5/14/2014

Australia - Draft rulings on transfer pricing reconstruction authority, documentation 

May 14:  The Australian Taxation Office (ATO) released two draft rulings setting forth its position on recently codified measures for “reconstruction” authority and for new documentation requirements under the transfer pricing regime of the Australian tax law.
  • The first draft ruling—TR 2014/D3—sets forth the ATO position as to when it can and will use its reconstruction authority in transfer pricing cases. The reconstruction authority significantly increases the ATO’s transfer pricing powers.

    Read a May 2014 report [PDF 77 KB] prepared by the KPMG member firm in Australia.


  • The second draft ruling—TR 2014/D4—sets forth the ATO position on transfer pricing documentation that an entity must prepare and maintain. The codification of the structure of transfer pricing documentation imposes a more stringent documentation standard—linking documentation to the “reasonably arguable position” standard that exists within the evidentiary requirements of the general income tax provisions.

    Read a May 2014 report [PDF 84 KB] prepared by the KPMG member firm in Australia.

KPMG observation

The two draft rulings are viewed by tax professionals as extremely important for transfer pricing purposes in Australia because the draft rulings underpin the application of new laws, and indicate a commitment by the ATO to apply the reconstruction authority and transfer pricing documentation requirements broadly.



Contact a tax professional with KPMG's Global Transfer Pricing Services.




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