On 26 November the ATO provided further guidance on the application of the STPR options in the form of Frequently Asked Questions (FAQ). In the document the ATO emphasises on the importance of demonstrating compliance with Australia’s transfer pricing rules, even when applying the STPR options, as all taxpayers are still subject to the transfer pricing rules in Subdivision 815-B, C and D of the ITAA 1997 regardless of whether the STPR options are applied.
If a taxpayer applies the STPR options, it will still have to document that it complies with all the eligibility criteria. In the FAQ document, the ATO specifically states that self-assessment by assertion is not sufficient; the ATO expects that taxpayers keep contemporaneous documentation to self-assess the eligibility. In practice this is usually demonstrated via a simplified transfer pricing document that outlines the reasons as to why the STPR option applies to the transaction(s).
Other key points outlined in the FAQ documents are:
 TR 1999/1 Income tax: international transfer pricing for intra-group services.
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?