The OECD released on October 2015, the final report on Transfer Pricing Documentation and Country by Country Reporting, Action 13. The report emphasises, among others, on the importance for taxpayers to prepare contemporaneous transfer pricing documentation to support the prices of the international related party dealings. The report also confirms that is critical for taxpayers to periodically review and update the transfer pricing documentation in order to ensure that the information is accurate and reliable
We are hearing from many companies having trouble understanding what contemporaneous documentation really means and what are the practical implications. The following case study summarises our experience with the most common misunderstandings.
AusCo is a subsidiary of ForCo, a company located in the United States. AusCo main business is the distribution of electronic products in Australia; AusCo purchases finished goods from ForCo to sell in Australia.
AusCo has prepared transfer pricing documentation for the income year ended 30 June 2011. The transfer pricing documentation included a benchmarking analysis prepared by ForCo for 30 June 2011; the search included companies located in the United States engaged in the distribution activities with third parties in similar conditions to the distribution arrangement between AusCo and Forco.
AusCo will be submitting the 30 June 2015 income tax return and International Dealings Schedule (IDS) in the next month and has advised their tax agent to disclose that AusCo has 100% transfer pricing documentation (Code 6) to support the prices of its purchases of finished goods from its international related party ForCo.
If your company is facing any of the issues described above? If you require assistance please contact Transfer Pricing Solutions on 03 5911 7001 or email admin@
Thec Covid-19 pandemic has triggered the most severe recession and is causing enormous damage to the world economy. The economic downturn will impact a group’s transfer prices, analysis and documentation, more so with the BEPS Action Plans in place and the high level of transfer pricing scrutiny across the globe.
JobKeeper forms part of taxable income in the tax return. Makes sense, it is a subsidy against wages, so I am sure there are no surprises there, but how do you assess the arm’s length financial outcomes of the entity for transfer pricing purposes?
The ATO expect that Australian entities will retain the benefit of the JobKeeper payment they receive. So how do you treat the JobKeeper payments for transfer pricing purposes?