Taxation Ruling 2014/8 gives outlines on 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 five key questions for preparation of documentation. These include considering the actual conditions of the transaction; considering relevant comparable circumstances; particulars of the methods used to identify arm’s length conditions; what are the arm’s length conditions and the appropriate transfer pricing treatment; and have material changes been identified and updated. Practice Statement PS LA 2014/3 sets out the responsibilities in respect of transfer pricing under self-assessment and sets out the steps to be taken in preparation of documentation.
