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 815-130   Relevance of actual commercial or financial relations  

Basic rule

815-130(1)    
The identification of the *arm ' s length conditions must:

(a) be based on the commercial or financial relations in connection with which the actual conditions operate; and

(b) have regard to both the form and substance of those relations.

Exceptions

815-130(2)    
Despite paragraph (1)(b), disregard the form of the actual commercial or financial relations to the extent (if any) that it is inconsistent with the substance of those relations.

815-130(3)    
Despite subsection (1), if:

(a) independent entities dealing wholly independently with one another in comparable circumstances would not have entered into the actual commercial or financial relations; and

(b) independent entities dealing wholly independently with one another in comparable circumstances would have entered into other commercial or financial relations; and

(c) those other commercial or financial relations differ in substance from the actual commercial or financial relations;

the identification of the *arm ' s length conditions must be based on those other commercial or financial relations.

815-130(4)    
Despite subsection (1), if independent entities dealing wholly independently with one another in comparable circumstances would not have entered into commercial or financial relations, the identification of the *arm ' s length conditions is to be based on that absence of commercial or financial relations.

815-130(5)    
Subsections 815-125(3) and (4) (about comparability of circumstances) apply for the purposes of this section.