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International transfer pricing developments: Australia

Transfer pricing is regulated in Australia by Division 13 of Part III of the Income Tax Assessment Act 1936 (ITAA 1936). Since its introduction transfer pricing has been one of the key areas of focus of the Australian Taxation Office (ATO).

Transfer pricing statutory requirements

Australia’s transfer pricing regulatory framework adopts the arm’s-length principle and includes anti-avoidance provisions that deal with the non-arm’s-length supply and acquisition of property in association with international agreements between connected entities. As a result taxpayers are required to correctly assess their tax obligations and ensure compliance with the arm’s-length principle.

It is important to note that Australian transfer pricing statutory rules do not impose specific legal requirements with respect to the preparation and maintenance of transfer pricing documentation to support the arm’s-length nature of related party dealings. Nonetheless taxpayers engaging in international transactions with connected entities for a total amount greater or...

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