Australia releases guidance on transfer pricing documentation and penalties

The Australian Taxation Office (ATO) on December 17 released a final ruling and two practice statements dealing with transfer pricing documentation and penalties.

Final ruling TR 2014/8 outlines the ATO’s views on the minimum transfer pricing documentation needed for an entity to be qualified to claim that its transfer pricing treatment is “reasonably arguable” and thus not subject to enhanced penalties if the entity’s position is proved incorrect.

An administration practice statement, PS LA 2014/3,  provides guidance on simplified transfer pricing recordkeeping options which will protect taxpayers from interest and penalties.

Also, an administrative practice statement,  PS LA 2014/2, explains when an entity will be liable for a transfer pricing penalty, how the entity’s transfer pricing penalty will be assessed, and how the commissioner’s discretion in relation to remission should be exercised.

See:

• TR 2014/8 – (Transfer pricing documentation and Subdivision 284-E) 

• PS LA 2014/3 – (Simplifying transfer pricing reccordkeeping) 

• PS LA 2014/2 – (Administration of transfer pricing penalties for income years commencing on or after 29 June 2013)