If you do not lodge the schedule with your tax return you must sign and date the schedule.
Only applies to schedules lodged in paper form.
Appendices
All foreign countries or jurisdictions not listed in the tables of listed countries and specified countries or jurisdictions are included in the other unlisted country or jurisdiction category.
Appendix 1: Specified countries or jurisdictions names and codes
Code |
Specified country or jurisdiction |
|---|---|
AND |
Andorra |
AIA |
Anguilla |
ATG |
Antigua and Barbuda |
ABW |
Aruba |
BRB |
Barbados |
BHS |
Bahamas |
BHR |
Bahrain |
BLZ |
Belize |
BMU |
Bermuda |
VGB |
British Virgin Islands |
CYM |
Cayman Islands |
COK |
Cook Islands |
CUW |
Curacao |
CYP |
Cyprus |
Appendix 2: Foreign and other jurisdiction names and codes
Appendix 3: Listed country names and codes
Code |
Listed country |
|---|---|
CAN |
Canada |
FRA |
France |
DEU |
Germany |
JPN |
Japan |
NZL |
New Zealand |
GBR |
United Kingdom of Great Britain and Northern Ireland |
USA |
United States of America |
Appendix 4: Activity codes
Activity |
Activity code description |
|---|---|
1 |
Administrative services Activities that relate to an entity's operations but excluding activities relating to financing and production. These activities include:
|
2 |
Advisory services Activities involving the provision and receipt of professional advice where a fee is paid for the advice, including:
|
3 |
Asset management Activities associated with the management of assets, funds or investments. This will be undertaken on a discretionary basis in accordance with an investment strategy, with the entity responsible for:
|
4 |
Borrowing and lending Activities involving the generation of internal and external funding. |
5 |
Brokerage Activities involving the mediation between a buyer and a seller, occurring in a range of products, including:
|
6 |
Cash & trade services Activities involving the facilitation of fund transfers and the exchange of goods and services, including:
|
7 |
Construction All construction activities including residential and commercial construction and the construction of utilities and infrastructure. |
8 |
Custody and transaction clearing services Custody is all activities that are associated with the safekeeping of securities for customers, also includes the collection of dividends, interest and proceeds from securities sales. Transaction clearing are all activities associated with the management of post-trading, pre-settlement credit exposures, to ensure that trades are settled in accordance with market rules, including:
|
9 |
Derivatives Activities undertaken in respect of derivatives (a financial instrument derived from some other asset, index, event, value or condition). The overall derivatives market has five major classes of underlying asset:
|
10 |
Distribution and sale of goods Goods purchased by a distributor from an international related party. |
11 |
Financing activities Activities involving dealings in financial instruments that would qualify as financial assets or financial liabilities under relevant Australian accounting standards or comparable foreign accounting standards but excludes financial instruments that would meet the definition of a derivative. At the time of this publication, the two key Australian accounting standards relevant to this question include:
The relevant amounts may be reported in the financial statements as revenue and gains or expenses and losses, depending on the accounting treatment of your relevant financial assets and financial liabilities (this includes amounts relating to hedging items that are classified in the financial statements as financial assets or financial liabilities). Therefore, for the purposes of this activity code:
|
12 |
Guarantees Activities associated with contracts under which a party agrees to perform an obligation or discharge a liability of another entity should that entity fail to do so. |
13 |
Insurance and reinsurance Insurance and reinsurance activities include general insurance, life insurance and health insurance. |
14 |
Leasing Activities that relate to agreement between two parties under which one is granted the right to use the property of the other for a specified period of time in return for a series of payments by the user to the owner. |
15 |
Licensing or transfer of intellectual property Activities involving an intellectual property rights owner (licensor) and another entity which is given authorisation to use these rights (licensee) in exchange for an agreed payment (fee or royalty). This includes activities involving:
|
16 |
Logistics Activities associated with the managing of a commercial organisation’s supply chain that supports the sourcing, timing and movement of goods and services, including:
|
17 |
Manufacturing and sale of goods Activities involved in the sale of goods created by a manufacturing process (excluding agriculture). |
18 |
Media, telecommunications and information services With regard to media and information services, activities associated with the creation, collation, dissemination and distribution of content via:
With relation to Telecommunications, activities associated with the operation, management, maintenance and sale of access to telecommunications infrastructure and networks including:
|
19 |
Primary production/extraction and sale of goods Activities involved in the sale of physical products that have resulted from:
|
20 |
Purchase and distribution of goods Goods sold by a distributor to an international related party. |
21 |
Purchase and manufacture of goods Activities associated with the purchase of goods to be used in a manufacturing process (excluding agriculture). |
22 |
Receipt/payment of dividends and distributions from trusts and partnerships |
23 |
Retail trade Activities associated with the retail trade of all goods classifications to end customers through a shopfront or e-commerce website. |
24 |
Sales and marketing services Sales:
Marketing:
|
25 |
Securitisation services Activities involving the packaging of an income by the party entitled to it and the subsequent sale of such income stream to investors. |
26 |
Software and information technology services Activities involved in the support and maintenance of software and technology used by the taxpayer. Activities relating to the ownership of the software and technology are excluded, such as leasing and rental fees. |
27 |
Superannuation Activities associated with providing, funding or offering investment strategies for financial security upon retirement. |
28 |
Technical services Activities involving:
|
29 |
Toll manufacturing services Activities involved with the provision of manufacturing services for a fee or price per unit payment, where the manufacturing entity does not take legal title to the inventory or finished goods. |
30 |
Treasury related services Activities involved in the managing of the taxpayer's financial operations, including:
|
31 |
Underwriting services Activities involves measuring risk exposure and determining the premium that needs to be charged to insure that risk, including:
Insurance underwriting should be reported under activity code 13 – insurance and reinsurance. |
32 |
Utilities and infrastructure Activities associated with the operation and management of utilities (for example, electricity, gas, water, sewerage) and infrastructure (for example, roads, rail, airports, sea ports). |
99 |
Other All other activities not listed above. |
Appendix 5: Main pricing methodologies
The arm's length pricing methodologies should be identified using the codes listed below.
Code |
Arm's length pricing method |
|---|---|
1 |
Apportionment of costs This pricing method apportions the costs associated with a controlled transaction among the associated enterprises. However, cases may arise where neither comparable dealings nor data are available to apply to traditional, or profit-based, methods. In these instances, application of an indirect method such as apportionment of costs on the basis of a formula may be applicable. |
2 |
Apportionment of income This pricing method apportions the income associated with a controlled transaction among the associated enterprises. As with code 1, this method may be appropriate where there are neither comparable dealings nor data to apply the traditional, or profit-based, methods to the pricing problem. |
3 |
Comparable uncontrolled price method This traditional transfer pricing method compares the price for property or services transferred in a controlled transaction, that is, with a related international party, to the price that is charged for comparable property or services under the same or similar circumstances in an uncontrolled transaction. Where it is possible to locate comparable uncontrolled transactions, the comparable uncontrolled price method is the most direct and reliable way to apply the arm's length principle. If there is any difference between the prices or the terms or nature of the controlled transaction and the uncontrolled transaction, this may indicate that the dealings of the associated enterprises are not arm's length. Note that intangible and intellectual property transactions present particular problems with regard to comparability, especially where such property is unique or specialised. If you use this method but the comparable uncontrolled price is adjusted to allow for particular circumstances of the controlled dealing, you should still record the adjusted price under this code. |
4 |
Cost-contribution arrangement A cost-contribution arrangement is one where members of a multinational group act in concert for the benefit of each of the participants to:
Each participant bears a fair share of the costs and is entitled to receive a fair share of rewards. The concept is akin to a joint venture or partnership. To be consistent with the arm's length principle, the contributors must be satisfied that they can obtain an acceptable rate of return within a timeframe that takes into account their financial and business circumstances. For more information, see Taxation Ruling TR 2004/1 Income tax: international transfer pricing – cost contribution arrangements. |
5 |
Cost-plus method This is a traditional transfer pricing methodology. The cost-plus method begins with the costs incurred by the supplier of property or services in a controlled transaction for property transferred or services provided to a related purchaser. An appropriate arm's length cost-plus mark-up is then added to this cost to make an appropriate profit in light of the functions performed and the market conditions. What is arrived at after adding the arm's length cost-plus mark-up to the above costs may be regarded as an arm's length price of the original controlled transaction. This method is probably most useful if:
This method is not suited for high value intangibles. Further analysis can be undertaken by reviewing the cost plus mark-up of the supplier in the controlled transaction. This is done by referencing the cost plus mark-up that the same supplier earns in comparable uncontrolled transactions. The cost plus mark-up that would have been earned in comparable transactions by an independent enterprise may serve as guidance. If a fixed percentage mark-up is applied to the relevant cost base without any benchmarking of that percentage against comparable independent dealings, it is not regarded as cost-plus method. |
6 |
Fixed mark-up applied to cost This method determines the transfer price for a controlled transaction by applying a fixed percentage mark-up to a relevant cost base where the mark-up is not benchmarked against comparable independent dealings. The absence of benchmarking distinguishes this method from the cost-plus method discussed at code 5. The fixed mark-up applied to cost code should be used as described by TR 1999/1 Income tax: international transfer pricing for intra-group services has been utilised to set the pricing of intra group services. |
7 |
Fixed percentage of resale price This pricing method determines the transfer price for a controlled transaction as a fixed percentage of the resale price, where the fixed percentage chosen is not benchmarked against the gross margins earned in comparable independent dealings. The absence of benchmarking distinguishes this method from the resale price method, code 10. The fixed percentage of resale price methodology code should be used as described by TR 1999/1 Income tax: international transfer pricing for intra-group services has been utilised to set the pricing of intra group services. |
8 |
Marginal costing Marginal costing applies only the variable production costs to the costs of a product. This method is often used by companies and multinational enterprise groups for internal cost accounting and management control purposes. Its use in setting transfer prices on international dealings between associated enterprises for tax purposes is acceptable only if pricing on the basis of marginal costs represents an arm's length outcome for the transfer of goods or services into the particular market. |
9 |
Profit split method This is a transactional profit methodology. The profit split method determines the appropriate pricing for transactions by:
The split of profit or loss between the parties must be made on an economically valid basis that approximates the division of profits in an agreement made at arm's length. |
10 |
Resale price method This traditional transfer pricing method may be appropriate where an enterprise sells a product to a related party who then resells that product to an independent third party. The resale price is reduced by the arm's length resale price margin and may then be regarded after adjustments for other costs associated with the original purchase of the product as an arm's length price of the original transfer of property between the related parties. Further analysis can be undertaken by reviewing the resale price margin of the reseller in the controlled transaction. This is done by referencing the resale price margin that the same reseller earns on items purchased and sold in comparable uncontrolled transactions. The resale price margin earned by an independent enterprise in comparable uncontrolled transactions may also provide guidance. Margins are usually measured at gross profit level, however a comparison undertaken at an intermediate level may be more accurate. A comparison at the net profit level falls under a different methodology – the transactional net margin method. The resale price margin will vary depending on the value added by the reseller. Variables such as functions performed, economic circumstances, assets employed, and risks undertaken should reflect higher margins. |
11 |
Transactional net margin method This is a transactional profit methodology. The transactional net margin pricing method is based on comparisons made at the net profit level between the taxpayer and independent parties in relation to a comparable transaction or dealing. It examines the net profit margin relative to an appropriate base (for example, costs, sales or assets) that a taxpayer realises from a controlled transaction. Comparisons at the net profit level can be made on a single transaction or in relation to some aggregation of dealings between associated enterprises. |
12 |
Transactional net margin method (whole-of-entity) The transactional net margin method is discussed at code 11. If after exercising commercial judgement you have decided to aggregate and test the arm’s length nature of multiple international related party dealings through the application of the transactional net margin method on a whole-of-entity basis, then use code 12 as the main pricing methodology. See Appendix 9 for when to use Transactional net margin method (whole-of-entity) methodology. |
13 |
Other arm's length methods Use code 13 if your arm's length method is not represented by codes 1 to 12. |
14 |
No transfer pricing method used Use code 14 if no principal transfer pricing method has been used. |
Appendix 6: Derivative codes
The type of derivative should be identified using the codes listed below.
Code |
Type of derivative |
|---|---|
1 |
Cross currency interest rate swap |
2 |
Currency derivative (not cross currency interest rate swap) including currency swap, forward, future or option |
3 |
Fixed for floating interest rate swap (not cross currency) |
4 |
Other interest rate derivative (not cross currency) |
5 |
Credit default swap |
6 |
Commodity derivative including commodity swap, forward, future or option |
7 |
Other asset swap |
8 |
Other derivative |
Appendix 7: Nature of item codes
Item code |
Item code description |
|---|---|
1 |
Company shares |
2 |
Contract manufacturing |
3 |
Contractual interests |
4 |
Deposits/investment assets |
5 |
Derivative portfolio |
6 |
Insurance policies |
7 |
Insurance recapitalisation |
8 |
Intellectual property/intangibles |
9 |
Interests in trust, partnership or other entity type |
10 |
Loan assets |
11 |
Loan liabilities |
12 |
Marketing hubs |
13 |
Real property |
14 |
Shared services |
15 |
Shipping |
16 |
Trading activities |
17 |
Other assets |
18 |
Other functions |
19 |
Other liabilities |
20 |
Other risks |
Where you believe that more than one item code may apply, use the most appropriate code.
The terms used in these codes should be interpreted in accordance with their ordinary meaning as used in the context of the industry to which the term relates.
Appendix 8: Transferor trust exemption codes
Code |
Subsection/section |
|---|---|
1 |
102AAT(1)(a)(i)(A) to (D) The transfer was:
|
2 |
102AAT(1)(a)(i)(A) to (C) & (E) The transfer was:
|
3 |
102AAT(1)(a)(i)(A) to (C) & (F) The transfer was:
This exemption will not apply to transfers made in the last three income years. |
4 |
102AAT(1)(a)(ii)(A) to (C) The transfer was:
|
5 |
102AAT(1)(a)(ii)(A), (B) & (D) The transfer was:
|
6 |
102AAZE De minimis exemption The transfer was made to a non-resident trust that is a resident of a listed country and the total of the attributable incomes of all non-resident trust estates is equal to or less than the lesser of either:
|
Appendix 9: Percentage of dealings with documentation
Percentage of dealings with documentation' refers to the aggregate dollar amount of transactions reported at specific questions in the schedule for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at each specific question.
If your relevant related party dealings meet the conditions for one of the simplified record keeping options in PCG 2017/2, use code 7 for the dealings for which you decide to apply the simplified record-keeping option. The simplified record-keeping options available are:
- Materiality – applicable revenue related dealings
- Small taxpayers – applicable revenue related dealings
- Distributors – applicable revenue related dealings
- Intra group services – applicable services related party dealings
- Management and administration services – applicable management and administration services related party dealings
- Technical services – applicable technical services related party dealings
- Low level loans – applicable inbound international related-party interest-bearing loans and associated expenses
Transfer pricing documentation
For income years commencing on or after 29 June 2013, section 284-250 of Schedule 1 to the Taxation Administration Act 1953 provides that a particular way of applying Subdivision 815-B of the ITAA 1997 is not reasonably arguable for the purpose of applying Division 284 of Schedule 1 to the Taxation Administration Act 1953 (concerning administrative penalties) unless the entity meets the documentation requirements in section 284-255.
In order for the documentation requirements in section 284-255 to be met, certain factual matters set out in subsection 284-255(2) must be readily ascertained from records that meet the requirements of subsection 284-255(1).
TR 2014/8 sets out our views on the documentation requirements in section 284-255.
It is recommended at paragraphs 80 to 121 of TR 2014/8 that the following five key questions be considered when documenting your transfer pricing treatment in light of your facts and circumstances:
- What are the actual conditions that are relevant to the matter?
- What are the comparable circumstances relevant to identifying the arm's length conditions?
- What are the particulars of the methods used to identify the arm's length conditions?
- What are the arm's length conditions and is the transfer pricing treatment appropriate?
- Have any material changes and updates been identified and documented?
If you meet the documentation requirements of Subdivision 284-E you may lessen the likelihood of the ATO conducting a transfer pricing review.
The selection of arm's length pricing methods for your related-party international dealings is discussed in TR 98/11.
Contemporaneous documentation
Documentation is contemporaneous if:
- it is existing or brought into existence either
- at the time you are developing or implementing any arrangement that might raise transfer pricing issues
- when you are reviewing these arrangements prior to or at the time of the preparation of tax returns
- the documentation records information relevant to determining the arm’s length conditions for the purpose of applying Division 815 of the ITAA 1997.
The documentation may be in the form of books, records, studies, budgets, plans and projections, analyses, conclusions and other material that record the information. It may be in electronic or written form.
The initial analysis of your international dealings for the purpose of determining the arm's length conditions for those dealings will have been carried out and documented at the time of engaging in the dealings. To review those international dealings before you prepare your tax returns is prudent business practice.
To determine the code for the percentage of your dealings with international related parties
At F items 5 to 13 and 17, write the relevant code from the table below for:
- the percentage of your dealings with international related parties for which you have the relevant written documentation; it is not a requirement for the purposes of selecting the code that relevant written documentation meets all the requirements of Subdivision 284-E of Schedule 1 to the Taxation Administration Act 1953
or
- code 7 for your dealings shown at items 5, 7, 8 or 11c for which you applied one of the simplified record-keeping options in PCG 2017/2.
If after exercising commercial judgement you have decided to aggregate and test multiple international related party dealings through the application of the transactional net margin method on a whole-of-entity basis, then do both of the following:
- write code 12 at E to show transactional net margin method on a whole-of-entity as the main pricing methodology.
- write the applicable code from the table below at label F to indicate the percentage of dealings with documentation for questions 5 to 13, and 17.
If, in exercising your commercial judgement you decide not to apply a whole of entity transactional net margin method analysis, you should test and document your international related party dealings separately and use one of the codes from the table below to show the percentage of the total of the dollar value for which you have documentation.
Code |
Percentage |
|---|---|
1 |
0% |
2 |
1% to less than 25% |
3 |
25% to less than 50% |
4 |
50% to less than 75% |
5 |
75% to less than 100% |
6 |
100% |
7 |
Applied simplified record keeping option in PCG 2017/2 |
You may calculate the percentage on the basis of a reasonable estimate.
A statistical sample may be an appropriate method of calculating the relevant percentage, provided the sample selection and mathematical consideration are consistent with generally accepted statistical methods.
Keep your working papers if you have used a sampling process to make this estimate.
Appendix 10: Capital asset pricing methodologies
The capital asset pricing methodologies should be identified using the codes listed below.
Code |
Pricing method |
|---|---|
1 |
Cost price |
2 |
Directors valuation |
3 |
Discounted cash flow |
4 |
Independent valuation |
5 |
Nil consideration |
6 |
Quoted market price |
7 |
Written-down value |
8 |
Other methods |
Cost price is the price the seller originally paid for the asset, including ancillary costs such as freight or handling.
Written-down value is a pricing method based on either the taxation 'adjustable value' or accounting residual value after depreciation has been allowed.
Discounted cash flow is a pricing method where the price of an asset is based on the discounted cash flow at the time of acquisition or disposal.
Director's valuation is a pricing method that is based on the directors' opinion of an asset's value, and not on any of the other methods listed in codes 1 to 8.
Independent valuation is a pricing method by which a suitably qualified person, acting at arm's length to both the buyer and seller, assesses the value of an asset.
Quoted market price is a price quoted on a public listed market, such as a public stock exchange, or commodities market.
Other methods are any other pricing method that is not mentioned in Appendix 5.
The above pricing methods may not provide an arm's length price under all circumstances. The above examples are not an exhaustive list.
Appendix 11: Capital value of a restructure
Use one of the following numeric codes to state the total of the dollar value of the restructure.
Code |
Range |
|---|---|
1 |
$0 to less than $10 million |
2 |
$10 million to less than $50 million |
3 |
$50 million to less than $100 million |
4 |
$100 million to less than $500 million |
5 |
$500 million or greater |
The dollar amounts or values asked for in this question are all based on your existing accounting records. For these transactions we ask you to make a reasonable determination of the value and we do not expect you to obtain a formal valuation for this purpose. Keep your working papers if you have made a reasonable determination.
Appendix 12: Transaction types for which foreign exchange gain returned or foreign exchange loss deducted
Use the following transaction types for reporting of international related party dealings for which you have returned a foreign exchange gain or deducted a foreign exchange loss shown at item 11g.
The reference in the table to debt interests is to debt interests under Division 974 of the ITAA 1997. For more guidance on what is a debt interest under Division 974, see Guide to the debt and equity tests.
Code |
Transaction type |
|---|---|
1 |
IRP ordinary borrowings |
2 |
IRP ordinary loans |
3 |
IRP trade related liabilities |
4 |
IRP trade related receivables |
5 |
IRP other debt interests issued |
6 |
IRP other debt interests acquired |
7 |
Other IRP liabilities/payables |
8 |
Other IRP assets/receivables |
Appendix 13: Currency codes
Currency code |
Currency |
|---|---|
USD |
US Dollar |
EUR |
Euro |
GBP |
British Pound |
JPY |
Japanese Yen |
CNY |
Chinese Yuan Renminbi |
KRW |
South Korean Won |
NZD |
New Zealand Dollar |
AED |
UAE Dirham |
HKD |
Hong Kong Dollar |
CAD |
Canadian Dollar |
MYR |
Malaysian Ringgit |
SEK |
Swedish Krona |
INR |
Indian Rupee |
CHF |
Swiss Franc |
SGD |
Singapore Dollar |
AUD |
Australian Dollar, if functional currency under Subdivision 960-D is not AUD |
Appendix 14: Type of hub
Code |
Type of hub |
|---|---|
MKT |
Marketing hub |
SHI |
Shipping hub |
SER |
Services hub |
SAL |
Sales hub |
NCP |
Non-Core procurement hub |
CPR |
Core procurement hub |