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Major changes to Australia’s transfer pricing rules

The second tranche of the comprehensive reform to Australia's transfer pricing laws has been released as Exposure draft law.  This new law will super-impose across the first tranche of law which has already been enacted and which applies to instances where a tax treaty applies to the transaction.  It is imperative that all New Zealand companies with Australian subsidiaries or branches understand how the ATO's new broad powers under transfer pricing will operate and where there may be particular areas of risk.

The self assessment nature of this new law will mean greater responsibilities for the Public Officer signing Australian tax returns to ensure that "arm's length conditions" match actual conditions on cross border transactions.  Not having adequate transfer pricing documentation that meets the requirements of these new rules, at the time of signing the tax return, could be treated as not having taken a reasonably arguable position.  To find out more about the application of these new rules, we attach EY's Tax Alert Major changes to Australian transfer pricing rules (pdf, 378.8kb).

To discuss your transfer pricing concerns further, please contact:

Mark Loveday
Partner – Transfer Pricing, Auckland
Tel: +64 9 300 7085

Ranesh Singh
Executive Director - Transfer Pricing, Auckland
Tel: +64 9 300-8022

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