Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 (101 of 2013)

Schedule 2   Modernisation of transfer pricing rules

Part 1   Main amendments

Taxation Administration Act 1953

5   Section 284-160 in Schedule 1

Repeal the section, substitute:

284-160 Base penalty amount : schemes

(1) The base penalty amount for a *scheme to which subsection 284-145(1) applies is, subject to section 284-224:

(a) 50% of your *scheme shortfall amount; or

(b) 25% of your scheme shortfall amount if it is *reasonably arguable that the adjustment provision does not apply.

(2) The base penalty amount for a *scheme to which subsection 284-145(2A) applies is, subject to section 284-224:

(a) 25% of your *scheme shortfall amount; or

(b) 10% of your scheme shortfall amount if it is *reasonably arguable that the adjustment provision does not apply.

(3) The base penalty amount for a *scheme to which subsection 284-145(2B) applies is worked out using this table and section 284-224 if relevant:

Base penalty amount

Item

Column 1

In this situation:

Column 2

The base penalty amount is:

1

having regard to any relevant matters, it is reasonable to conclude that an entity that (alone or with others) entered into or carried out the *scheme, or part of it, did so with the sole or dominant purpose of that entity or another entity getting a *transfer pricing benefit from the scheme

the sum of:

(a) 50% of your *scheme shortfall amount, to the extent that it is not attributable as mentioned in paragraph (b); and

(b) 25% of your scheme shortfall amount, to the extent (if any) that it is attributable to the entity, or the entity's agent, treating the adjustment provision as applying (including not applying) to a matter (or identical matters) in a particular way that is *reasonably arguable

2

item 1 does not apply

the sum of:

(a) 25% of your *scheme shortfall amount, to the extent that it is not attributable as mentioned in paragraph (b); and

(b) 10% of your scheme shortfall amount, to the extent (if any) that it is attributable to the entity, or the entity's agent, treating the adjustment provision as applying (including not applying) to a matter (or identical matters) in a particular way that is *reasonably arguable

Note: For special rules about when transfer pricing treatment is not reasonably arguable, see Subdivision 284-E.

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