Second stage of the transfer pricing reforms - Government releases exposure draft

On 22 November 2012, the Government released for public comment the Exposure Draft of the Tax Laws Amendment (Cross Border Transfer Pricing) Bill 2013: Modernisation of Transfer Pricing Rules.

The Exposure Draft proposes to implement the second stage of the Government's transfer pricing reforms announced in November 2011.

Key Points

• Division 13 will be repealed, and the recently-enacted Subdivision 815-A will no longer apply from the application date of the proposed changes;
• the proposed changes implement a self-assessment approach, in place of the current rules, which require the Commissioner to make a determination to effect a transfer pricing adjustment;
• unlike Division 13 (which focuses on the pricing of individual transactions), the proposed changes adopt a broader, profit-based approach;