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This question seeks information in order to assess transfer pricing risks arising from royalty arrangements between Australian taxpayers and international related parties. We seek to determine the level of these transactions between Australian taxpayers and their international related parties and identify the pricing methodology used in relation to these arrangements.
The definition of royalty and royalties in subsection 6(1) of the ITAA 1936 and the various double tax agreements in the Schedules to the Income Tax (International Agreements) Act 1953 (Agreements Act) should be used to determine what a royalty is for the purpose of this question.
The definitions in the ITAA 1936 and the double tax agreements vary. Where there is a conflict between the definition of royalties for Australia's domestic tax law and that in a particular double tax agreement, the definition in the relevant double tax agreement will override subsection 6(1) of the ITAA 1936 (subsection 4(2) of the Agreements Act).
The dollar amounts or values asked for in this question are all based on your income tax records.
If you had international related party dealings involving royalties during the income year, answer yes to this question and complete the required fields.
In the first column, at C provide the total amount of royalties you paid to international related parties claimed as deductions for the income year.
In the second column, at D provide the total amount of royalties received from international related parties included in your assessable income for the income year.
In the third column, at E specify the principal arm's length pricing method used to set or review consideration in respect of the royalties paid and received by you.
Last modified: 09 Nov 2011QC 24292
For the list of price methodology codes, see Appendix 6.
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