New draft tax Rulings and draft Practice Statements outline the Australian Tax Office’s approach to transfer pricing and the standards that are required from taxpayers. Businesses need to urgently consider these publications in order to manage tax risks. The changes to transfer pricing laws introduced in 2013 require taxpayers to self assess and determine the application of the transfer pricing rules when preparing the tax return.
The Australian Taxation Office (ATO) released the two new draft transfer pricing Taxation Rulings and new two draft Practice Statements on 16 April 2014. These set out the ATO’s view on the effect of the new transfer pricing laws (Subdivisions 815-B and 815-C) and the actions required from taxpayers.
Taxpayers need to scrutinize these documents closely because the ATO has become very vigorous on transfer pricing issues and is expecting high standards from taxpayers. As a consequence of global trends and the Base Erosion Profiting Shifting (BEPS) activities taxpayers should expect more ATO scrutiny of their international tax compliance in the coming months.
