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  • International transfer pricing – introduction to concepts and risk assessment

    Australia's transfer pricing rules seek to avoid the underpayment of tax in Australia by having businesses price related party international dealings according to what is expected from independent parties in the same situation.

    Pricing for international dealings between related parties should reflect the right return for the activities carried out in Australia, the Australian assets used (whether sold, lent or licensed), and the risks assumed in carrying out these activities.

    Pricing not in accordance with Australia's transfer pricing rules is often referred to as 'international profit shifting'.

    You should carefully consider terms and conditions of any international dealings with related parties to ensure your business outcomes properly reflect economic activity in Australia.

    Australia's double tax agreements and domestic law require pricing of goods and services and allocation of income and expenses between related parties to accord with the arm's length principle.

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      Last modified: 24 Jul 2018QC 17107