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Transfer Pricing Insights

 


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    Consultation Paper

    Income tax: Cross border profit allocation - Review of transfer pricing rules

    The Australian Taxation Office View on the Full Federal Court decision in the SNF’s case

    The Australian Taxation Office (the “ATO”) recently released a Decision Impact Statement (“DIS”) in response to the decision of the Full Federal Court of Australia in Commissioner of Taxation v SNF (Australia) Pty Ltd (2011) FCAFC 74.  The Court ruled in favour of the taxpayer.

    At the outset, it is noted that the Government has announced a proposal to ‘reform’ Australia’s transfer pricing legislation and the DIS reflects present written law.  The ATO, in the DIS, notes that the legal position will probably be materially different if Parliament (backdates to 2004) amending legislation along the lines proposed.

    Backdated Reform of Australia's Transfer Pricing Rules

    On 1 November 2011, the Assistant Treasurer, Bill Shorten, released a consultation paper addressing proposed reform of Australia’s transfer pricing rules with the objective of making those rules consistent with international standards.  Some reform is to apply to income years commencing on or after 1 July 2004!  The Government says that its objective is to improve the integrity and efficiency of the tax system and to minimise profit-shifting between multinational enterprises.

    New requirement to report uncertain and other tax positions to the Australian Taxation Office

    The ATO has recently released the most current draft of the Reportable Tax Position (RTP) schedule.  The content and / or design of the schedule is subject to change until 2012 tax time when tax publications are made available. The RTP is to be lodged with the company income tax return. A copy of the draft schedule can be accessed from the ATO website at:

    http://www.ato.gov.au/content/downloads/bus00279408rtp2011.pdf

    Proposed FAF rules will not apply for the 2010-11 income year

    In one of his final announcements before the end of the 2011 financial year, the Assistant Treasurer, the Hon Bill Shorten MP, announced that the proposed Foreign Accumulation Fund (FAF) rules will not apply for the 2010-11 income year.

    Moore Stephens welcomes this timely announcement as it provides certainty for the funds management industry and its investors at the commencement of the reporting season for the 2010-11 year.

    Commissioner of Taxation v SNF (Australia) Pty Ltd (2011): Practical implications for the application of the Comparable Uncontrolled Price (“CUP”) transfer pricing methodology.

    The Full Federal Court (the “Court”) on 1 June 2011 dismissed the Commissioner of Taxation’s (The “Commissioner”) appeal from the single judge’s decision of the Federal Court in 2010.  Click here  to read our transfer pricing insights article on the 2010 Federal Court decision.

    Disclosure required of Uncertain Tax Positions

    The Australian Taxation Office (ATO) has announced its intention to develop a new reportable tax position (RTP) schedule to the 2012 company tax return. 

    A practical view of the proposed change to the Controlled Foreign Company (“CFC”) provisions.

    The Government recently released Exposure draft legislation to introduce new CFC provisions, which should simplify calculations with respect to ownership of CFCs and significantly reduce the compliance burden of affected taxpayers.

    Provision of Software held to be royalties by the Indian Income Tax Appellate Tribunal and Indonesia issue Transfer pricing guidelines.

    Provision of Software held to be royalties.

    Software companies doing business in India have been put on notice by the Indian Income Tax Department following an unexpected outcome in the Income Tax Appellate Tribunal (Microsoft Corporation v. Assistant Director of Income-tax, International Tax Division). 

    TR 2010-7 - interaction between thin cap and transfer pricing

    New ATO Taxation Ruling impacting on the pricing of offshore related party loans

    On 27 October 2010, the Commissioner of Taxation (the “Commissioner”) finalised its draft ruling on the interaction between the transfer pricing provisions and the thin capitalisation provisions.  Draft ruling TR 2009/D6 (the “Draft Ruling”) was finalised as Taxation Ruling TR 2010/7 (the “Ruling”).
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