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Australian Transfer Pricing Legislation Approved

by Mary Swire,, Hong Kong

23 August 2012

The Australian Senate has passed legislation on the application of transfer pricing rules, designed to ensure that multinational companies pay their 'fair share' of tax.

The Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012 confirms that the transfer pricing rules contained in Australia's tax treaties, and incorporated into domestic law, provide assessment authority in treaty cases.

Announcing the Bill's passage, Assistant Treasurer David Bradbury explained that "profit-shifting can pose a serious threat to Australia's revenue base. Transfer pricing rules are intended to prevent multinational companies from avoiding paying their fair share of tax by shifting their profits offshore".

In 2009, related party cross-border trade was valued at approximately AUD270bn (USD280bn). This represented roughly 50% of Australia's cross border trade flows.

"Robust transfer pricing rules make sure that Australia's revenues are protected and large multinational companies pay their fair share of tax," Bradbury stressed.

The changes apply to income years commencing on or after July 1, 2004. This was the first income year following parliament's last statement detailing its understanding that the law operated in this way.

This comprehensive report in our Intelligence Report series examines the global and national landscapes in which companies can use transfer pricing to improve their after-tax returns, including summaries of recent developments in design of the corporate supply train, the usefulness of 'offshore' in international corporate tax planning, and a section covering the spread of DTAAs and CFC laws. It is available in the Lowtax Library at and a description of the report can be seen at
TAGS: compliance | tax | business | tax compliance | tax avoidance | law | corporation tax | Australia | group taxation | offshore | multinationals | controlled foreign corporations (CFC) | legislation | transfer pricing

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