Review of transfer pricing rules - Modernising Division 13

The government announced on 1 November 2011 it proposed to consult on reforms to the transfer pricing rules in the income tax law and Australia's tax treaties. It intends to bring them into line with international best practice, improving the integrity and efficiency of the tax system.

Transfer pricing refers to the prices charged when one part of a multinational group buys or sells products or services from another part of the same group in a different country. The prices charged will impact their level of profits, and therefore the amount of tax they have to pay, in the respective countries.

These rules require multinational firms to price intra-group goods and services to properly reflect the economic contribution of their Australian operations.

Media release

For more information refer to the following media releases

• No. 144/2012 Progressing reforms to Australia's transfer pricing rules, issued on 22 November 2012 by the Assistant Treasurer.
• No.145/2011 Robust transfer pricing rules for multinationals, issued on 1 November 2011 by the Assistant Treasurer and Minister for Financial Services and Superannuation.

Legislation and supporting materials

The following legislation was introduced in Parliament on 13 February 2013:

• Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
• Explanatory Memorandum.

More information Treasury released a Consultation Paper on the changes to the transfer pricing rules as part of a consultation process to provide interested parties with an opportunity to comment on 1 November 2011. Draft legislation and Explanatory Memorandum - Modernisation of transfer pricing rules was released on 22 November 2012.