Australia transfer pricing documentation guide
January 31, 2008
Paul Welch and Fletch Heinemann, of Baker & McKenzie, provide a guide to the legal structure for transfer pricing documentation. Additional reporting from DLA Piper
Under the Australian tax laws, the onus is on the taxpayer to establish that the consideration applicable to international related party transactions is at arm's length. In any disputes, the Commissioner of Taxation has the distinct advantage of being able to impose a self-determined arm's length consideration where he forms the view that the consideration applied was not arm's length. The taxpayer then has the unenviable task of challenging the commissioner and, in order to be successful, establishing that another consideration correctly reflects the arm's length position. Adequately documenting a transfer pricing methodology therefore plays a pivotal and proactive role in a taxpayer's audit defence strategy.
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