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  • Question 14

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    This question asks whether you have had any international related party dealings involving no payment or a non-monetary payment (as defined below). Information regarding the nature of these dealings and where they occurred will further assist us in identifying if there has been international related party dealings that give rise to a:

    • transfer pricing risk (but would not be reported at other questions in the schedule due to the nature of the consideration being nil or non-monetary)
    • a capital gains tax risk.

    No payment

    Where there has been no charge or other consideration payable for the provision of services, transfer of property or other benefit provided under an international related party dealing, then this would be taken to be a dealing involving no payment.

    Attention

    You are not required to report at this question any interest free loans disclosed at question 11.

    You are not required to report transactions where you have received a benefit for no payment.

    You are required to report transactions where you have provided a benefit for no payment.

    End of attention

    Non-monetary payment

    A dealing involving a non-monetary payment may be a barter, swap, bonus or discount, or any type of similar arrangement.

    A non-monetary payment will generally include consideration that is not one of the following:

    • monetary payment
    • payment by cheque
    • telegraphic and bank-to-bank transfer of funds.

    Debt-for-equity swaps will be taken to be a non-monetary payment.

    Capital or revenue in nature

    Refer to the instructions to question 12 for guidance on whether dealings are capital or revenue in nature.

    If you had any international related party dealings involving no payment or a non-monetary payment, answer 'Yes' at label A of question 14 and complete the following labels.

    Item 14a is completed as follows in relation to your international related party dealings involving no payment:

    • At label B (in the column headed Capital), write the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a non-revenue (capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving no payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
    • At label C (in the column headed Capital), write the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a non-revenue (capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving no payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.
    • At label D (in the column headed Revenue), write the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a revenue (non-capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving no payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
    • At label E (in the column headed Revenue), write the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a revenue (non-capital) nature involving no payment. If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving no payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.

    Item 14b is completed as follows in relation to your international related party dealings involving a non-monetary payment:

    • At label B (in the column headed Capital), write the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a non-revenue (capital) nature involving a non-monetary payment. If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving a non-monetary payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
    • At label C (in the column headed Capital), write the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a non-revenue (capital) nature involving a non-monetary payment. If you have had more than one particular type of international related party dealings of a non-revenue (capital) nature involving a non-monetary payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.
    • At label D (in the column headed Revenue), write the Appendix 2 country code to indicate the location of the related party for your international related party dealings of a revenue (non-capital) nature involving a non-monetary payment. If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving a non-monetary payment, use the Appendix 2 country code for such type of dealings with the highest dollar value.
    • At label E (in the column headed Revenue), write the Appendix 7 code to indicate the nature of the item subject of your international related party dealings of a revenue (non-capital) nature involving a non-monetary payment. If you have had more than one particular type of international related party dealings of a revenue (non-capital) nature involving a non-monetary payment, use the Appendix 7 code for the nature of the item for such type of dealings with the highest dollar value.
    Further Information

    For the:

    End of further information

    Example 1

    A taxpayer provides core banking system software valued at $100 million to an international related party located in the United States. For the purposes of this example, assume the core banking system software forms part of the taxpayer's capital assets. The taxpayer does not charge the international related party for the software. This would meet the criteria of an international related party dealing involving no payment that was capital in nature.

    Example 2

    A taxpayer purchases a derivative portfolio for $20 million from an international related party located in the United Kingdom. For the purposes of this example, assume the portfolio forms part of the taxpayer's ordinary revenue assets. If, rather than paying for the portfolio with a monetary payment (for example, $20 million funds transfer to the related party), the decision was made to satisfy the amount payable under the purchase by any of the following:

    • forgiving royalties that would otherwise be payable by the international related party
    • transferring title in a fixed asset
    • agreeing to a discount on specified future transactions.
     

    Therefore, this would meet the criteria of an international related party dealing involving a non-monetary payment that was revenue in nature.

    Example 3

    During the current income year an Australian taxpayer had the following international related party dealings involving no payment or a non-monetary payment.

    Payment type

    Capital or revenue

    Country

    Country code

    Nature of item

    Item code

    Value of dealing

    No payment

    Capital

    United States

    USA

    Provided real property

    13

    $50m

    No payment

    Capital

    United Kingdom

    GBR

    Provided company shares

    1

    $75m

    Non-monetary payment

    Revenue

    Singapore

    SGP

    Insurance policies

    6

    $68m

    Non-monetary payment

    Revenue

    Japan

    JPN

    Loan assets

    10

    $101m

    With this information, the Australian taxpayer completes question 14 as follows:

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    Last modified: 08 Aug 2014QC 26054