Review of transfer pricing rules - Australia's tax treaties

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 media release no. 145 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 received royal assent on 8 September 2012:

• Tax Laws Amendment (Cross-Border Transfer Pricing) Act (No. 1) 2012
• Explanatory Memorandum.

More information For more information refer to: Consultation Paper released by Treasury on the changes to the transfer pricing rules as part of a consultation process to provide interested parties with an opportunity to comment Exposure draft and Explanatory Memorandum Cross-border transfer pricing released on 16 March 2012.