Guide to completing Schedule 25A 2011

Transfer pricing

Transfer pricing occurs when property has been supplied or acquired under an international agreement.

However there are rules in place to make sure that the parties to the transaction were, or are, dealing with each other at arm's length in relation to the supply or acquisition.

In the absence of transfer pricing rules, taxpayers might seek to shift profits out of Australia to jurisdictions with lower tax rates. This could be achieved by pricing transactions between Australian residents and related parties overseas at prices that do not reflect the arm's length price for those transactions.

Sections within Definition glossary

• Active income test
• Aggregate amount
• Arm's length pricing methods
• Arm's length principle
• Attributable income
• Attributable taxpayer
• Attribution account
• Attribution percent x adjusted distributable profits
• Attribution percent x interest/entitlement x section 456 to 459A amount
• Central management and control
• Change of residence of a controlled foreign company from an unlisted country to Australia
• Change of residence of a controlled foreign company from an unlisted country to a listed country
• Control in relation to a trust estate
• Controlled foreign company
• Controlled foreign company rules
• Controlled foreign entity
• Controlled foreign partnership
• Controlled foreign trust
• Discretionary trust estate
• Documentation
• Eligible designated concession income
• Eligible transferor
• Entitled to acquire
• Foreign company
• Foreign investment fund rules
• Foreign trust
• Intangible property
• International related parties
• Listed and unlisted countries
• Non-assessable non-exempt income
• Non-monetary consideration
• Non-portfolio dividends
• Non-resident trust estate
• Other transactions
• Participates in capital
• Permanent establishment or branch
• Pricing methods for capital assets
• Related-party international dealings
• Relationship
• Services
• Subdivision 768-G of ITAA 1997
• Tainted assets
• Tainted income
• Tangible property
• Transactions
• Total dollar value
• Transfer pricing
• Transferor trust
• Transferor trust rules
• What income has been comparably taxed?