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  • PCG 2017/4: cross border related party financing and related party derivative transactions updated

    We have published updates to our PCG 2017/4 compliance approach to taxation issues associated with cross border related party financing arrangements and related party derivative transactions.

    Schedule 2 of the PCG outlines the indicators businesses can use to consider the risk of compliance activity in relation to the following issues to related party derivative arrangements:

    • deductibility of payments
    • liability to withholding tax
    • the application of the transfer pricing rules in Division 815
    • the application of Part IVA to schemes which are confined to such arrangements.

    This Schedule effective from 1 January 2019, applies to existing and newly created related party derivative arrangements.

    This guideline will assist you to:

    • understand how we rate risks related to cross border financing arrangements
    • make an assessment of your risk rating
    • determine if the ATO will require greater assurances about your financing arrangements.

    If you have a cross border related party derivative arrangements, we encourage you to:

    • review their cross border related party derivative arrangements and ensure that they are ‘low risk’ to avoid compliance action
    • read the Schedule’s transitional arrangement proposal, which is available for those who restructure their cross-border related party derivative arrangements into a ‘low risk’ zone during the time period specified
    • seek independent professional advice or discuss their situation with us by emailing international@ato.gov.au
    Last modified: 28 Nov 2019QC 60777