The Australian Taxation Office (ATO) released guidance on what the ATO expects taxpayers to prepare in order to comply with the transfer pricing laws and manage related risks on 17 December 2014. According to guidance 25% penalty applies and increased to 50% where the dominant purpose of entering into a scheme was to obtain a transfer pricing benefit. Practice Statement PS LA 2014/2 confirms that taxpayers with no supporting transfer pricing documentation at the time of filing the tax return are liable to an automatic penalty of 25%. Lower penalty rates down to 10% may apply if the taxpayer can establish a reasonably argued position.
