International related party dealings and transfer pricing
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A Did the fund have any transactions or dealings with international related parties, irrespective of whether they were on revenue or capital account?
Print X in the appropriate box.
International related parties are associated entities or persons, including permanent establishments, who are parties to international (that is, cross border) dealings which may be subject to:
- Subdivision 815-B or 815-C of the ITAA 1997
- the business profits article of a relevant tax treaty, or
- the associated enterprises article of a relevant tax treaty.
International related parties include:
- any overseas entity or person who participates directly or indirectly in the fund’s management, control or capital
- any overseas entity or person in respect of which the fund participates directly or indirectly in the management, control or capital
- any overseas entity or person in respect of which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in the fund’s management, control or capital
- a permanent establishment and its head office
- two permanent establishments of the same person.
‘Participates’ includes a right of participation, the exercise of which is contingent on an agreed event occurring. ‘Person’ has the same meaning as in subsection 6(1) of the ITAA 1936 and section 995-1 of the ITAA 1997.
The type of dealings or transactions that will require the fund to select Yes at this question are dealings by the entity with international related parties as mentioned above, such as an overseas holding company, overseas subsidiary, overseas permanent establishment of the entity, or non-resident trust in which the entity has an interest.
These international dealings or transactions may be for the provision or receipt of services, or transactions in which money or property has been sent out of Australia, or received in Australia from an overseas source during the income year. The dealings may also include transfers of tangible or intangible property, provision or receipt of services, or the provision or receipt of loans or financial services.
If money or property is not actually sent out of Australia or received in Australia, but accounting entries are made that have the effect of money or property being transferred, this is also to be taken as an international transaction.
B Was the aggregate amount of the transactions or dealings with international related parties (including the value of property transferred or the balance outstanding on any loans) greater than $2 million?
Print X in the appropriate box.
The aggregate amount of the dealings is the total amount of all dealings, whether on revenue or capital account, and includes the balance of any loans or borrowings outstanding with international related parties.
Transactions must not be netted off against each other. Hence, a $600,000 purchase from, and a $700,000 sale to, a related party should be treated as totalling $1,300,000 not $100,000.
Last modified: 21 Aug 2015QC 44343