• Service: Tax, Global Transfer Pricing Services
  • Type: Regulatory update
  • Date: 7/18/2014

Australia - Update on contemporaneous transfer pricing documentation guidelines 

July 18:  The Australian Taxation Office (ATO) has yet to issue guidelines on the preparation of contemporaneous transfer pricing documentation under the new transfer pricing rules that will apply to the tax year ended 30 June 2014.

To date, the ATO has released Draft Ruling TR 2014/D4 outlining the new transfer pricing documentation requirements under Subdivision 815. This ruling is not expected to be finalised before October 2014.

The new documentation requirements are expected to be more onerous than the existing four-step process advocated by the ATO, potentially creating an additional compliance burden. This sentiment was expressed very clearly by taxpayers in response to the ATO’s request for comments on the draft ruling.

As a result and consistent with the Commissioner's intent to concentrate efforts on high-risk international dealings, proposals are currently being discussed regarding the simplification of transfer pricing record keeping requirements for certain low risk taxpayers and dealings. This could potentially include:

  • Small taxpayers - below a turnover threshold with routine related-party dealings
  • Distributors - below a turnover threshold with routine dealings and exceeding a minimum benchmarked profit before tax
  • Intra-group services - expanding on the safe harbour provisions in TR 99/1
  • Low-level loans - AUD denominated and below a balance threshold

These proposals are still in draft form; however, the introduction of more onerous documentation requirements could herald the arrival of long overdue simplification measures for low risk taxpayers and dealings.

Read a July 2014 report prepared by the KPMG member firm in Australia: Transfer Pricing: A traffic jam when you’re already late

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

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