Transfer pricing regulations in Australia have been strict for many years, but recent changes to laws and an increased focus from the Australian Taxation Office (ATO) have made them even more stringent.
These regulations, which are consistent with those of other OECD member countries, are based on the “arm’s length principle.” This principle states that prices for goods and services sold to related international parties must reflect what independent parties would pay for the same or similar goods or services. As such, if an organisation’s results differ significantly from those of other non-related companies in the same industry with comparable operations, tax authorities may alter their taxable income to align with the associated “arm’s length” results.
What’s more, alongside a continued adherence to the internationally recognised ‘arm’s-length-principle’, global businesses must also document their cross-border transactions with related parties in compliance with domestic tax rules in the nations from which they operate.
Understanding Australian Transfer Pricing Rules
In Australia, companies that operate as members of global groups are required to maintain records of their transfer pricing policies, known as “Transfer Pricing Manuals, ” or “Transfer Pricing Studies” which includes accessing databases of comparable trading information and to document the requirements specific to Australian tax laws.
They must also disclose transactions with international entities that exceed $2 million in an International Dealings Schedule (IDS) as an element of their annual company tax return, or alternatively within annual CbC Reporting lodgement obligations for significant global entities
These businesses may be subject to transfer pricing review or audit by the ATO at any time, so it is crucial to have an accurate IDS and current Transfer Pricing Manual to prevent additional reviews or negative audit results.
Transfer Pricing Services to Ensure Your Company Satisfy the ‘Arm’s Length’ Test?
Determining if a company’s transactions meet the “arm’s length” standard can be difficult, especially when information about competitors who aren’t publicly disclosing financial information is necessary.
Fortunately, as part of our transfer pricing services at Accru Felsers, we offer our clients access to comprehensive databases of dependable financial data on thousands of companies across various industries and locations to assist in this regard.
Our Transfer Pricing Methods at Accru Felsers
Accru Felsers has been a leader in transfer pricing services in Australia for over two decades. Our transfer pricing manuals offer a detailed explanation of the methods used to compare pricing, as well as demonstrate how a company’s pricing aligns with the “arm’s length” standard. This includes all the necessary information to meet the requirements of the ATO.
Our team of transfer pricing experts also have hands-on experience with ATO transfer pricing review and have successfully negotiated Advance Pricing Agreements (APAs). We can guide you through the transfer pricing rules and methods and provide the necessary support to defend against any claims made during an ATO review.
Furthermore, our transfer pricing strategy can help you identify more cost-effective structuring for your international transactions and make pricing decisions based on pertinent commercial drivers.
Our Transfer Pricing Services
PREPARATION & REVIEW OF TRANSFER PRICING DOCUMENTATION
- Regular monitoring and updating of transfer pricing documentation to comply with Australian regulations, including meeting the ATO’s requirement for a reasonably arguable position (RAP)
- Preparation and review of the International Dealings Schedule (IDS) and necessary disclosures
- Creation of Country by Country report, Master file and Australian local file with mandatory disclosures for companies with a turnover of AUS$1 billion or more.
TRANSFER PRICING STRUCTURING & STRATEGIES
- Using third-party databases to design, implement and evaluate transfer pricing methods, policies and structures
- Evaluating and planning tax strategies from a transfer pricing perspective on a regional, national and global scale
- Establishing and updating benchmark and database evaluations on an annual basis.
RESPONDING TO AUSTRALIAN TAXATION OFFICE AUDITS AND DISPUTE RESOLUTION
- Providing guidance and support during ATO risk evaluations, audits, and legal proceedings, including strategy consultation, drafting correspondence and defending transfer pricing methods and documentation
- Assistance in securing an Advance Pricing Agreement (APA) with both local (ATO) and international tax authorities
- Assistance during arbitration proceedings and in mutual agreement procedures (MAPs)
In addition to services related to transfer pricing rules, our specialists also offer a full range of international taxation services.
For more information, please contact us at Accru Felsers.