Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 815 - Cross-border transfer pricing  

Subdivision 815-B - Arm ' s length principle for cross-border conditions between entities  

Operative provisions

SECTION 815-115   Substitution of arm ' s length conditions  

815-115(1)    
For the purposes covered by subsection (2), if an entity gets a *transfer pricing benefit from conditions that operate between the entity and another entity in connection with their commercial or financial relations:

(a) those conditions are taken not to operate; and

(b) instead, the *arm ' s length conditions are taken to operate.

Note 1:

The conditions that operate include, but are not limited to, such things as price, gross margin, net profit, and the division of profit between the entities.

Note 2:

There are special rules about documentation that affect when an entity has a reasonably arguable position about the application (or non-application) of this Subdivision: see Subdivision 284-E in Schedule 1 to the Taxation Administration Act 1953 .

815-115(2)    
The purposes covered by this subsection are:

(a) if the *transfer pricing benefit arises under subparagraph 815-120(1)(c)(i) - working out the amount (if any) of the entity ' s taxable income for the income year; and

(b) if the transfer pricing benefit arises under subparagraph 815-120(1)(c)(ii) - working out the amount (if any) of the entity ' s loss of a particular *sort for the income year; and

(c) if the transfer pricing benefit arises under subparagraph 815-120(1)(c)(iii) - working out the amount (if any) of the entity ' s *tax offsets for the income year; and

(d) if the transfer pricing benefit arises under subparagraph 815-120(1)(c)(iv) - working out the amount (if any) of *withholding tax payable by the entity in respect of interest or royalties.