Simplifying Transfer Pricing Record Keeping

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We discussed Australia’s new transfer pricing regime in our December newsletter. The Australian Taxation Office has since released administrative guidance providing small businesses with some relief from the complex and costly task of preparing transfer pricing documentation, a notable approach for accountants in Sydney.

The entities that might qualify for simplified record-keeping requirements:

  • Small businesses with a turnover of less than $25 million
  • Distributors with a turnover of less than $50 million, provided they have a profit before tax ratio of at least 3%
  • Entities with intra-group services of $1 million or less or representing less than 15% of the total revenue or expenses of the Australian economic group
  • Entities with inbound loans with a balance of less than $50 million throughout the year

To qualify, entities must not have derived sustained losses (i.e. three consecutive years of losses), and must not have related party dealings with entities in “specified countries”.

There are other specific eligibility criteria outlined on the ATO’s website.

The simplified record-keeping options do not limit the operation of the law, and an appropriate arm’s length methodology must still be adopted to determine pricing. Where the simplified record-keeping options are self-assessed, however, compliance action will not be taken to examine relevant transfer pricing records.  The assurance applies for three financial years commencing from 29 June 2013.

If you have any queries in relation to the above, don’t hesitate to reach out and contact us.

*Correct as of April 2015

Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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