On 16 April 2014 the Australian Taxation Office
("ATO") published long-awaited draft guidance
("Guidance") in relation to several important aspects of
Australia's new transfer pricing ("TP") legislation.
The 'new' legislation was enshrined into our law on 29 June
2013; notably, Subdivision 815-B, 815-C and 815-D of the Income Tax
Assessment Act 1997 ("ITAA 1997"). The aim of our
legislation and the Guidance is to ensure application of the
arm's length principle. The Guidance applies from 29 June
2013.
The guidance takes the form of two draft Taxation Rulings
("TR") and two draft Practice Statement Law
Administration documents ("PSLA").
One ruling, TR 2014/D4, deals with TP documentation requirements
if a taxpayer is to potentially limit the quantum of penalties that
would otherwise apply in the event of an adverse TP adjustment.
This ruling is supported by PSLA 3673 which explains the
"documentation process" that the ATO prescribes as best
practice. The new
