The Australian Taxation Office (ATO) has recently updated Practical Compliance Guideline (PCG) 2017/2 Simplified transfer pricing record-keeping (STPRK) options. The PCG outlines transaction types or activities identified as low risk for international related party dealings.
PCG 2017/2 Simplified transfer pricing record keeping options has undergone a review that analyzed the effectiveness of the eight options that were available for eligible taxpayers during the 2014–18 income years.
The updated PCG makes a number of following changes:
- There are now 7 options instead of 8. The management and administration option has been consolidated into the new low value adding intra-group services option which aligns with the OECD’s simplified approach to low-value adding intra-group services dealings;
- An increase in the small taxpayers turnover threshold from AUD 25 million to AUD 50 million;
- Introduction of a new AUD 500,000 combined threshold for royalties, licence fees or research and development dealings for the small taxpayers, distributors and materiality options; and
- Removal of the ‘related-party dealings with entities in specified countries’ criterion.
The changes apply to income years beginning on or after 1 July 2018 (or the substituted accounting periods beginning on or after 1 January 2018).
