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  • Division 815 Technical working group Minutes - 26 July 2016

    Meeting details


    747 Collins St Melbourne

    52 Goulburn St Sydney



    26 July 2016








    Anthony Siouclis


    Sam Balaraman

    Contact and Secretariat:

    Sam Balaraman

    Contact phone:

    02 9374 2843


    ATO Members


    Anthony Siouclis

    Assistant Commissioner, Public Groups and International

    John Nicols

    Public Groups and International

    Sam Balaraman


    Kevin O'Shaughnessy

    Senior Director, Technical Leadership Group

    Shahzeb Panhwar

    Director, Profit Shifting Practice

    Helen Kelly

    Senior Tax Counsel

    Michelle Osler

    Technical Leadership Group

    Cameron Smith

    Senior Director, APA and MAP Program Management Unit (by phone)

    Natasha Zorzi

    APA and MAP Program Management Unit (by phone)

    Ivar Kvistad

    Public Groups and International

    External representatives

    Denise Honey

    ATO appointee

    Sharon Jansen


    Soulla McFall


    Damian Preshaw


    Reynah Tang


    Paul Suppree


    Michael Kobetsky

    ATO appointee

    Anthony Seve

    ICAA (by phone)

    Jacques Mu

    FCAI (by phone)


    Stuart Edwards

    ATO appointee

    Wayne Sutherland


    Chris Bowman

    ATO appointee

    Agenda items


    Division 815 Technical working group agendas, minutes and related papers are not binding on the Australian Taxation Office (ATO) or any of the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    1 Welcome and introductions

    Anthony Siouclis welcomed members to the final meeting of the Division 815 Technical Working Group.

    2 Previous minutes and action items

    Minutes for the previous meeting were accepted.

    3 Updates

    3.1 Guidance products on transfer pricing issues

    The ATO advised that the following topics have been approved for listing on the ATO Rulings Program as Tax Determinations.

    3.1.1 Transfer pricing treatment of loans (including interest free loans)

    The ATO advised that:

    • The legislative framework that allowed the Commissioner to exercise his discretion in the application of Div. 13 to no-interest loans does not exist in Div 815. The ATO was open to considering whether there was no transfer pricing benefit when presented with evidence to demonstrate that arm's length parties would have also lent at nil interest rate.
    • The same transfer pricing rules should apply, irrespective of whether a loan is inbound or outbound.
    • When, having regard to its fundamental characteristics, there is a debtor-creditor relationship, the operation of Div. 815 needs to be considered.

    Stakeholders discussed the relevance of TR 92/11 in the context of Division 815 and Australia's Double Taxation Agreements.

    3.1.2 Subdivision 815-B and Division 974 interactions

    The Working Group considered the interaction between Subdivision 815-B and the debt and equity provisions of Division 974 and the implications on the foreign investment (non-portfolio dividends) provisions of Subdivision 768-A.

    The ATO noted that:

    • While it is possible that the provisions interpreted in isolation may potentially give rise to different results, section 815-110 effectively provides an ordering rule so that Division 815 should apply before the application of Division 974 and Subdivision 768-A.
    • During consultation, we invite the submission of real world examples which would be useful to illustrate any problems associated with the interaction between Division 815 and Subdivision 768-A.

    3.2 PSLA on consequential adjustments

    The ATO advised that the proposed PSLA on section 815-145 is not yet on the ATO Rulings Program because it is contingent on other issues being progressed.

    The Working Group discussed the possible implications on inbound and outbound interest free loans as well as GST.

    3.3 Letters of comfort

    The ATO advised:

    • A PSLA on letters of comfort has been developed but is subject to approval.
    • The proposed Product would be for entities that are not eligible for, or for whom it would not be viable to pursue, an APA or a private ruling.
    • A pilot program for letters of comfort may go ahead.
    • Likely timing for delivery is November - December 2016.
    • From time to time letters similar to those under contemplation go out to taxpayers. A PSLA will facilitate a more systematic approach to the use of these letters.

    The proposal received widespread support from Working Group members.

    3.4 PSLA and PCG on the Mutual Agreement Procedures

    The ATO advised:

    • A draft PSLA has been prepared and will be circulated internally shortly before being subject to targeted external consultation.
    • The PSLA is expected to cover transfer pricing and possibly other tax issues relevant to the Mutual Agreement Procedures.
    • Under consideration are the practicalities following a settlement.
    • Currently under consideration is guidance on the mandatory binding arbitration provisions (from BEPS Action Item 15) that form a part of some Double Tax Agreements; the first release of the PSLA may not address this issue.

    3.5 Transfer pricing documentation safe harbours

    The ATO advised that:

    • A draft PCG on transfer pricing documentation safe harbours is being prepared and is expected to be circulated for discussion in around a fortnight.
    • The PCG is expected to roll over the existing transfer pricing safe harbours and should replace the web guidance (which will be taken off the ATO website).
    • A new transfer pricing safe harbour is being finalised on outbound loans.
    • Data on the uptake on the simplified transfer pricing record keeping rules has not yet been examined.

    A stakeholder made the point that the current entry requirements are too tight; consideration could be made so that an entity is not automatically disqualified where, for example, there is a $1 payment on royalties or $1 payment to a specified country.

    4 Discussion on post closure

    With the closure of this working group, the ATO advised that there are existing avenues for consultation on particular transfer pricing matters, including the various items on today's agenda that are on the ATO Rulings program. Members and others are invited to send any systemic non-taxpayer specific issues or suggestions for improvement (including Division 815 issues) to any of today's ATO participants or to the TP Safe Harbours electronic mailbox (

    The ATO thanked participants for their active contribution during the life of the Division 815 Working Group.

    5 Other business

    No other business.

      Last modified: 24 Oct 2016QC 50380