1. Introduction
On 12 November 2014 the ATO issued its long awaited Taxation
Ruling TR 2014/6 titled: "Income tax: transfer
pricing – the application of section 815-130 of the Income
Tax Assessment Act 1997" (the "Act").
The ruling provides the Australian Taxation Office's
("ATO") view on how it will determine whether an entity
derives a transfer pricing benefit from the "actual"
commercial or financial cross-border dealings of a taxpayer when
compared to the outcomes from those same dealings that "might
be expected" to have arisen between independent entities
dealing at arm's length.
TR2014/6 addresses the Commissioner's controversial power to
reconstruct a taxpayer's actual transactions.
The ruling was originally issued in draft 1 form in
April 2014 and we then stated, oftentimes there are no comparable
transactions (with arm's length parties) against which a
taxpayer may benchmark its dealings simply because a parent company
will generally only deal with a
