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End of attention

Issues and methods used

Figure 5 shows the types of dealings covered by completed APAs covered in 2010-11. Several APAs covered more than one type of dealing, such as selling tangible property, and receiving or providing management and technical services. In these cases, the primary dealing is listed first and all covered dealings are totalled in the right-hand column.

Figure 5: APAs completed by type of dealing (2010-11)

Type of dealing

Primary dealings

All dealings

Tangible property



Intangible property






Total completed



These three broad categories of dealings cover:

  • the supply or acquisition of goods by agents marketers, distributors and manufacturers
  • the licensing of intellectual property
  • services including selling, financial, management and other support services.

Figure 6 shows the primary methods applied in the APAs completed during the year. As in previous years, the transactional net margin method (TNMM) is most commonly used. This is mainly because taxpayers have ready access to independent comparable data in Australia and elsewhere to show that related party dealings achieve an arm's length outcome. The tested party may be either in Australia or overseas depending on the case. TNMM can also be used to establish routine returns in a residual profit split. This year we completed more APAs where the principal covered transaction involved the acquisition or supply of services. Many of these were agreed using cost plus as the transfer pricing method.

Figure 6: APAs completed by primary method (2010-11)

APAs completed by primary method (2010-11)

    Last modified: 06 Mar 2015QC 25181