The Good, The Bad And The Ugly: Reflecting On Transfer Pricing Developments In 2012

Australia's transfer pricing landscape has been transformed in the last 12 months. While some of the change is positive, much of it is problematic and aspects are positively alarming. As 2012 draws to a close, it is appropriate to reflect on the year that was.

THE GOOD

During the year, the government introduced a new domestic transfer pricing provision, Subdivision 815-A of the Income Tax Assessment Act 1997 (the "retrospective TP legislation"), which gives the Commissioner of Taxation the power to make transfer pricing adjustments under Australia's tax treaties.

An exposure draft of Subdivisions 815-B to 815-E (the "go forward TP legislation") was also released which will replace the old domestic transfer pricing rules in Division 13 of the Income Tax Assessment Act 1936 when enacted.