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  • Changes to PCG 2017/2 simplified transfer pricing record keeping options

    We've made updates to Practical Compliance Guideline (PCG) 2017/2 Simplified transfer pricing record keeping options which was released last year.

    The PCG outlines transaction types or activities identified as low risk for international related party dealings. It specifies the criteria you need to self-assess your eligibility to use one or more of the simplification options to help you reduce your record-keeping and compliance burdens.

    Review

    PCG 2017/2 Simplified transfer pricing record keeping options has undergone a review that analysed the effectiveness of the eight options that were available for eligible taxpayers during the 2014–18 income years.

    As a result of our review and feedback received, changes have been made to the eligibility criteria for each option to improve access and to meet our commitment to align with the OECD’s transfer pricing guidelines.

    What changed

    Some of the changes include:

    • there are now seven options instead of eight. The management and administration option has been consolidated into the new low value adding intra-group services option which aligns with the OECD’s simplified approach to low-value adding intra-group services dealings
    • an increase in the small taxpayers turnover threshold from $25 million to $50 million
    • introduction of a new $500,000 combined threshold for royalties, licence fees or research and development dealings for the small taxpayers, distributors and materiality options
    • removal of the ‘related-party dealings with entities in specified countries' criterion.

    When the changes apply

    The changes apply to income years beginning on or after 1 July 2018 (or your substituted accounting periods beginning on or after 1 January 2018).

    What you need to know

    • Read PCG 2017/2 Simplified transfer pricing record keeping options and check whether you are eligible to apply the options.
    • If you have already arranged your tax affairs for the 2019 income year and were eligible to apply one or more of the options as they existed prior to the changes, you can continue to apply the options and eligibility criteria as they existed prior to the changes in respect of the 2019 income year only.
    • If you choose to apply one or more of the options in the PCG, we will not allocate compliance resources to review the transactions or arrangement covered by the options, beyond reviewing your eligibility to use the option. You will need to keep contemporaneous documentation proving your eligibility for the options applied.

    Ask us a question

    Ask your questions by emailing us at TPsafeharbours@ato.gov.au

      Last modified: 10 Jan 2019QC 57736