House of Representatives
Tax Laws Amendment (Cross-border Transfer Pricing) Bill (No. 1) 2012
Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Explanatory Memorandum - Act No. 29 of 1982, page 79.
See, for example, the Joint Standing Committee's report on treaties, Report No. 48, page 16, paragraph 3.
See, for example, Article 21 of the Australia-United Kingdom tax convention.
Thomas Magney, Australia's Double Tax Agreements - A Critical Appraisal of Key Issues - pages 42 to 44.
When introducing the New International Tax Arrangements (Managed Funds and Other Measures) Bill 2004 , the then Minister for Revenue and Assistant Treasurer noted the Bill amended the rules for determining the source of income derived by certain residents of treaty partner countries. In discussing an example of how certain conduit income was inappropriately taxed, the Minister observed 'the amendments ensure the domestic source rules rather than treaty source rules ( which have a wider potential reach ) apply in this case'. (emphasis supplied) Commonwealth, Parliamentary Debates , House of Representatives, 18 November 2004 (The Hon Mal Brough, Minister for Revenue and Assistant Treasurer).
Submissions in consultation on this Bill cited other judgements commenting on the general role of allocation rules in tax treaties, which considered other treaty rules allocating taxing rights: Goldberg J in Chong v Commissioner of Taxation (2000) 101 FCR 134 at [27], [44]; Middleton J in GE Capital Finance Pty Ltd v Federal Commissioner of Taxation (2007) 159 FCR 473 at [27], [29], [36], [45] and [46]; and Lindgren J in Undershaft ( No 1 ) Ltd v FCT (2009) 175 FCR 150 at [17] and [27]. But, importantly, these cases did not specifically test the question of whether transfer pricing articles had been incorporated into Australia's municipal law so as to give rise to a power to make or amend assessments.
Downes J in Roche Products Pty Limited and Commissioner of Taxation [2008] AATA 639 (22 July 2008) at [191]. His Honour noted the submissions by the parties on this point were 'limited' and both parties accepted that finding on the issue would not change the outcome of the case.
Middleton J in SNF Australia Pty Ltd v Commissioner of Taxation [2010] FCA 635 at [23-24]. In SNF, his Honour distinguished his earlier comments on the role of another treaty provision in GE Capital Finance Pty Ltd .
DSG Retail Limited and Others v HMRC (2009)