Transfer pricing

Transfer pricing occurs when property has been supplied or acquired under an international agreement.

However there are rules in place to make sure that the parties to the transaction were, or are, dealing with each other at arm's length in relation to the supply or acquisition.

In the absence of transfer pricing rules, taxpayers might seek to shift profits out of Australia to jurisdictions with lower tax rates. This could be achieved by pricing transactions between Australian residents and related parties overseas at prices that do not reflect the arm's length price for those transactions.

    Last modified: 21 Feb 2012QC 25356