The transfer pricing rules require documentation to be prepared by the time of lodging the relevant tax return. Guidance in TR 2014/D4 clarifies that documentation must be brought into existence by the date of the tax return. Documentation prepared overseas must be prepared according to Australian rules and must be accessible to the Australian taxpayer. The ATO encourages a risk assessment approach to the documentation. The draft ruling outlines what needs to be included in the documentation if the taxpayer is to meet the standard of a “reasonably arguable position” and avoid penalties, and sets out a five step process for preparation of documentation.
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