Question 11



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To evaluate the information provided in question 10 we need to know whether the Australian taxpayer is conducting derivative trading globally through a trading structure such that profits from the activities are shared with related parties in other jurisdictions.

Where this is the case there is a transfer pricing risk due to the need to determine the appropriate allocation of profits between the relevant parties.

Global trading of financial instruments including derivatives is defined by reference to the fact that some part of the business is conducted in more than one tax jurisdiction. This concept of trading derivatives globally is based on the OECD's definition of global trading of financial instruments. For a discussion of what might constitute global trading, refer to paragraphs 9 to 11 of the Introduction of OECD Document - The Taxation of Global Trading of Financial Instruments (1998).

Answer yes or no to this question depending on whether you engaged in the trading of derivatives globally through a trading structure such that you share global profits from these activities with related parties in other countries.

Last modified: 09 Nov 2011QC 24292