The Australian Taxation Office (ATO) has published updated guidance on the local and master file requirements – which applies to reporting periods beginning on or after 1 January 2024 –, and transfer pricing guidance for the private property and construction sector for 2025.
The local and master file requirement guidance includes the Local file instructions 2025, for completing the 2025 local file as part of country-by-country (CbC) reporting, and the Local file/master file 2025, which detail the design and requirements of the local and master files and CbC report notifications.
The guidance for the private property and construction sector for 2025 outlines how to comply with transfer pricing rules when securing funding from foreign sources. It explains the transfer pricing rules and will help businesses use – and demonstrate – arm’s length funding arrangements.
Company transfer pricing guidance for 2025
Under the transfer pricing rules, it’s important that funding arrangements (for example, a loan) with an overseas related party or associate (for example, a relative) apply the arm’s length principle. This ensures funding arrangements are commercially similar to what would be expected between independent parties acting at arm’s length.
The rules are intended to prevent businesses from using non-arm’s length terms and conditions for funding, in order to claim excessive debt deductions such as interest, or to defer or avoid interest withholding tax.
The guidance also covers topics including:
- how to demonstrate the commerciality of your funding arrangements and ensure they are at arm’s length
- our observations of conventional funding practices in the property and construction industry
- our concerns and factors that attract our attention
- examples of different funding arrangements and behaviours along with our view on their level of tax risk
- your record-keeping and other compliance obligations when receiving funding from an overseas related party or associate.
