Transfer Pricing Risk Reviews (‘TPRR’) and Audits are a focus point of the ATO as a result of Australia’s new transfer pricing legislation and the global focus on BEPS. Tax Offices worldwide are focusing on transfer pricing and many businesses are found to have insufficient support for their cross-border prices. The absence of transfer pricing documentation provides the Australia Taxation Office (ATO) with a strong case to adjust a taxpayer’s transfer pricing arrangements. Without such documentation, it is more difficult to argue against any Tax Office adjustment and, where there is an adjustment, penalties will not be reduced.
Australia has detailed transfer pricing documentation requirements and a detailed International Dealing Schedules (IDS) in the income tax return specifically covering transfer pricing. Many countries throughout the world have detailed transfer pricing documentation requirements. Whatever size business, taxpayers must be able to document and justify the arm’s length nature of their related party transactions.
We will team with you to document your company’s business and international related party transactions and the economic analysis of transactions through benchmarking and other analysis. Having contemporaneous transfer pricing documentation assists in proactively defending your transfer pricing position and to reduce penalties in the event of an adjustment.