• Mutual arrangements for certainty

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    Commercial deals or restructure events: pre-lodgment agreements

    We engage early with privately owned and wealthy groups to offer a pre-lodgment compliance agreement for Commercial Deals and Restructure events. This gives practical certainty in relation to the tax outcomes from these significant events while they are being planned, or prior to lodgment. Commercial Deals include sales of businesses or property, initial public offerings, mergers & acquisitions and other similar deals.

    Where we approach our clients about their involvement in a commercial deal or restructure event participation is voluntary, including the option of deferring the engagement interactions with us to a more suitable time prior to lodgment. Working transparently with us can achieve a mutual resolution of any tax issues arising prior to lodgment. This enables potential tax disputes to be avoided post lodgment. Where agreement can be reached, we will undertake not to conduct a review or audit in relation to the commercial deal if it is carried out and lodgment is received as agreed.

    If you would like to request this service, you can contact us by:

    Annual compliance arrangements

    An annual compliance arrangement (ACA) is a voluntary administrative arrangement between the ATO and you to govern our compliance relationship.

    An ACA provides a level of practical certainty for you by mutually resolving tax risks as soon as possible, generally prior to lodgment. ACAs complement other products and services we offer, such as our rulings program. These arrangements are most suited to Australia's largest businesses. ACAs can apply to income tax, goods and services tax, excise, fringe benefits tax, petroleum resource rent tax, or any combination of these taxes.

    Large businesses considering an ACA will need to confirm good tax governance processes are in place and be committed to working openly with us by making full and true disclosures of major transactions and tax risks.

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    Advance pricing arrangements

    An advance pricing arrangement (APA) is an agreement with us on the future application of the arm's length principle to your dealings with international related parties.

    APAs provide certainty by:

    • ensuring the fair application of the arm's length principle to related party international dealings
    • eliminating or reducing the risk of double taxation on related party international dealings (particularly in bilateral and multilateral APAs)
    • eliminating the risk of a transfer pricing audit on the related party international dealings covered by the APA.

    APAs may be:

    • unilateral, which involves your business in Australia and us
    • bilateral or multilateral, which involves an agreement between two or more tax administrations and their respective taxpayers.

    APAs generally cover a period of three to five years and may be reviewed if the trading circumstances materially change. APAs have an annual reporting requirement.

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    Mutual agreement procedures

    International transactions can expose your group to double taxation. For example, a transfer pricing adjustment arising from an audit in one country may result in the same income being taxable in two jurisdictions.

    If you believe you have been or will be subject to double taxation, you can apply for relief to the tax administration of your jurisdiction. If your application is accepted we will discuss your case with the other tax administration and try to resolve it in accordance with the relevant double tax agreement. This process is known as a mutual agreement procedure.

    A mutual agreement procedure is part of the dispute resolution process and is in addition to your objection and appeal rights.

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    Last modified: 01 Sep 2017QC 44828