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  • International transfer pricing – concepts and risk assessment

    Australia's transfer pricing rules seek to avoid the underpayment of tax in Australia. The rules aim to make sure that businesses price their related-party international dealings in line with what is expected from independent parties in the same situation.

    Pricing for international dealings between related parties should reflect the right return for:

    • the activities carried out in Australia
    • the Australian assets used (whether sold, lent or licensed)
    • the risks assumed in carrying out these activities.

    Pricing that does not comply with Australia's transfer pricing rules is often referred to as 'international profit shifting'.

    You should carefully consider the terms and conditions of any international dealings you enter into with related parties to ensure that your business outcomes properly reflect economic activity in Australia.

    Australia's double-tax agreements and domestic law require that pricing of goods and services and allocation of income and expenses between related parties comply with the arm's length principle.

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      Last modified: 01 Feb 2021QC 17107