In this section:
- 26. and 27. International related party dealings or transfer pricing
- 28. Overseas interests
- 29. Thin capitalisation
- 30. Transactions with specified countries
26. and 27. International related party dealings/transfer pricing
X – Did you have any transactions or dealings with international related parties (irrespective of whether they were on revenue or capital account)?
Print X in the appropriate box at X item 26.
International related parties are persons who are not dealing wholly independently with one another in their international commercial or financial relations, and whose dealings or relations can be subject to Subdivision 815-B of the ITAA 1997 or the associated enterprises article of a relevant double tax agreement (DTA). The term includes:
- any overseas entity or person who participates directly or indirectly in the company’s management, control or capital
- any overseas entity or person in which the company participates directly or indirectly in the management, control or capital
- any overseas entity or person in which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in the company’s management, control or capital.
Participates includes a right of participation, the exercise of which is contingent on an agreed event occurring.
Person has the same meaning as in subsection 6(1) of the ITAA 1936 and section 995-1 of the ITAA 1997.
For more information as to the relevant degree of participation, see Taxation Ruling IT 2514 Income tax: Company Schedule 25A: Information return for companies that transact business with related overseas entities.
The type of ‘dealings or transactions’ that will require the entity to answer yes at this question are dealings by the entity with related parties (as mentioned above), such as an overseas holding company, overseas subsidiary, or a non-resident trust in which the entity has an interest. These dealings or transactions may be the provision or receipt of services, or transactions in which money or property has been sent out of Australia, or received in Australia from an overseas source during the income year. The dealings may also include transfer of tangible or intangible property, or the provision or receipt of loans or financial services.
If money or property is not actually sent out of Australia or received in Australia but accounting entries are made that have the effect of money or property being transferred, this is also taken to be an international transaction.
Y – Was the aggregate amount of the transactions or dealings with international related parties (including the value of property transferred or the balance outstanding on any loans) greater than $2 million?
Print X in the appropriate box at Y item 27.
The aggregate amount of the transactions with international related parties is the total amount of all dealings, whether on revenue or capital account, and includes the balance of any loans or borrowings outstanding at the end of the income year.
Transactions must not be netted off against each other. Hence, a $600,000 purchase from and a $700,000 sale to a related party should be treated as totalling $1,300,000 not $100,000.
If the answer is yes, complete the International dealings schedule 2020.
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