Australia - ATO launches international structuring, profit shifting field program 

December 16: The Australian Taxation Office (ATO)—in line with current base erosion and profit shifting (BEPS) activities—launched an “international structuring and profit shifting” (ISAPS) field review program.

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.

KPMG observation

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:

Anthony Seve

+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”

©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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 on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this


Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.

Email your contact information.

TaxNewsFlash-United States by year