Mutual arrangements for certainty
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.
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.
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.
You can enter into an annual compliance arrangement to identify and resolve tax issues early, request an advance pricing arrangement for your dealings with international related parties, or apply for a mutual agreement procedure for relief from double taxation on international transactions.