The ISAPS field review program focuses on both corporate tax and transfer pricing aspects of complex and high value cross-border transactions—including financing transactions, intellectual property transactions, and corporate restructure transactions.
ATO review process
The ATO is expecting to send 40 review notification letters to taxpayers prior to Christmas and a further 85 in the new year. These letters will request significant, detailed international data and a presentation to the ATO.
The ATO reviews are expected to take six to nine months, resulting in a risk rating or escalation to audit.
This is a decentralised national program involving over 100 ATO officers and will follow a “client risk review’ and rating methodology approach.
A key, controversial issue associated with these reviews is the ATO's desire to review information associated with the overseas aspects of taxpayers' global structures so that the tax authorities can understand the broader context of transactions and operations. This will include details of global corporate value chains including sales, profits, and tax paid for each jurisdiction in which the group operates; payments to and from low tax jurisdictions; e-commerce; and tax risk governance.
Managing these ISAPS reviews can be complex, given that many questions relate to factual information overseas. It is therefore essential for taxpayers to consider a number of issues at the outset of an ISAPS review, including:
- Confirming the existence, location and ownership of relevant material
- Establishing a multi-function (tax law, corporate tax, transfer pricing, indirect tax) working group to deal with questions
- Considering reasonableness of ATO time frames
For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group in Australia:
+61 2 9335 8728
Read this December 2013 report prepared by the KPMG member firm in Australia: ISAPS – “Imagine there’s no countries, it isn’t hard to do”
Or contact a tax professional with KPMG's Global Transfer Pricing Services.