Australian CFC reform means greater focus on transfer pricing
February 28, 2011
Draft legislation on Australia’s controlled foreign company (CFC) rules and the tax treatment of certain foreign income has been released in an attempt to modernise the system. The changes mean tougher transfer pricing enforcement.
CFC rules apply to foreign companies controlled by an Australian resident. Control (including joint control) is defined in the Australian Accounting Standard AASB127 as “the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities”. The reform will also affect foreign companies looking to set up regional headquarters in Australia.
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