Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 815 - Cross-border transfer pricing  

Subdivision 815-A - Treaty-equivalent cross-border transfer pricing rules  

Operative provisions

SECTION 815-35   Consequential adjustments  

Consequential adjustment - associated enterprises

815-35(1)    
The Commissioner may make a determination under subsection (4) in relation to an entity (the disadvantaged entity ) if:

(a) the Commissioner makes a determination under subsection 815-30(1) in relation to a * transfer pricing benefit an entity gets under subsection 815-15(1) ; and

(b) the Commissioner considers that, but for the conditions mentioned in the * associated enterprises article :

(i) the amount of the taxable income of the disadvantaged entity for an income year might have been expected to be less than its actual amount; or

(ii) the amount of a * tax loss of the disadvantaged entity for an income year might have been expected to be greater than its actual amount; or

(iii) the amount of a * net capital loss of the disadvantaged entity for an income year might have been expected to be greater than its actual amount; or

(iv) an amount of * withholding tax payable in respect of interest or royalties by the disadvantaged entity might have been expected to be less than its actual amount; and

(c) the Commissioner considers that it is fair and reasonable that the actual amount mentioned in subparagraph (b)(i), (ii), (iii) or (iv) (as the case requires) be adjusted accordingly.

Consequential adjustment - business profits

815-35(2)    
The Commissioner may make a determination under subsection (4) in relation to an entity (the disadvantaged entity ) if:

(a) the Commissioner makes a determination under subsection 815-30(1) in relation to a * transfer pricing benefit an entity gets under subsection 815-15(2) ; and

(b) the Commissioner considers that, if the permanent establishment were a distinct and separate entity engaged, and dealing, in the manner mentioned in the * business profits article :

(i) the amount of the taxable income of the disadvantaged entity for an income year might have been expected to be less than its actual amount; or

(ii) the amount of a * tax loss of the disadvantaged entity for an income year might have been expected to be greater than its actual amount; or

(iii) the amount of a * net capital loss of the disadvantaged entity for an income year might have been expected to be greater than its actual amount; or

(iv) an amount of * withholding tax payable in respect of interest or royalties by the disadvantaged entity might have been expected to be less than its actual amount; and

(c) the Commissioner considers that it is fair and reasonable that the actual amount mentioned in subparagraph (b)(i), (ii), (iii) or (iv) (as the case requires) be adjusted accordingly.

Nil amounts

815-35(3)    
For the purposes of this section:

(a) treat an entity that has no taxable income for an income year as having a taxable income for the year of a nil amount; and

(b) treat an entity that has no tax loss for an income year as having a tax loss for the year of a nil amount; and

(c) treat an entity that has no * net capital loss for an income year as having a net capital loss for the year of a nil amount.

Consequential adjustment - determinations

815-35(4)    
The Commissioner may make one or more of the following determinations, in writing, for the purpose of adjusting an amount as mentioned in paragraph (1)(c) or (2)(c):

(a) a determination of an amount by which the taxable income of the disadvantaged entity for an income year is decreased;

(b) a determination of an amount by which the tax loss of the disadvantaged entity for an income year is increased;

(c) a determination of an amount by which the * net capital loss of the disadvantaged entity for an income year is increased;

(d) a determination of an amount by which the * withholding tax payable by the disadvantaged entity in respect of interest or royalties is decreased.

815-35(5)    
The Commissioner may take such action as the Commissioner considers necessary to give effect to a determination under this section.

815-35(6)    
The Commissioner must give a copy of a determination under this section to the disadvantaged entity.

815-35(7)    
A failure to comply with subsection (6) does not affect the validity of the determination.

815-35(8)    
(Repealed by No 81 of 2016)

815-35(9)    
An entity may give the Commissioner a written request to make a determination under this section relating to the entity. The Commissioner must decide whether or not to grant the request, and give the entity notice of the Commissioner ' s decision.

815-35(10)    

If the entity is dissatisfied with the Commissioner ' s decision, the entity may object, in the manner set out in Part IVC of the Taxation Administration Act 1953 , against that decision.