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Section G: Taxpayer's declaration

Last updated 5 November 2018

If you do not lodge the schedule with your tax return you must sign and date the schedule.

Only applies to schedules lodged in paper form.

Appendices

All foreign countries or jurisdictions not listed in the tables of listed countries and specified countries or jurisdictions are included in the other unlisted country or jurisdiction category.

Appendix 1: Specified countries or jurisdictions names and codes

A – C

D – M

N – Z

A – C: Specified countries or jurisdictions names and codes

Code

Specified country or jurisdiction

AND

Andorra

AIA

Anguilla

ATG

Antigua and Barbuda

ABW

Aruba

BRB

Barbados

BHS

Bahamas

BHR

Bahrain

BLZ

Belize

BMU

Bermuda

VGB

British Virgin Islands

CYM

Cayman Islands

COK

Cook Islands

CUW

Curacao

CYP

Cyprus

D – M: Specified countries or jurisdictions names and codes

Code

Specified country or jurisdiction

DMA

Dominica

GIB

Gibraltar

GRD

Grenada

GGY

Guernsey

HKG

Hong Kong

IRL

Ireland

IMN

Isle of Man

JEY

Jersey

LBR

Liberia

LIE

Liechtenstein

LUX

Luxembourg

MHL

Marshall Islands

MUS

Mauritius

MCO

Monaco

MSR

Montserrat

N – Z: Specified countries or jurisdictions names and codes

Code

Specified country or jurisdiction

NRU

Nauru

NLD

Netherlands

NIU

Niue

PAN

Panama

KNA

Saint Kitts and Nevis

LCA

Saint Lucia

SXM

Saint Martin (Dutch Part)

VCT

Saint Vincent & the Grenadines

WSM

Samoa

SMR

San Marino

SYC

Seychelles

SGP

Singapore

CHE

Switzerland

TCA

Turks and Caicos Islands

VIR

US Virgin Islands

VUT

Vanuatu

Appendix 2: Foreign and other jurisdiction names and codes

A – C

D – M

N – Z

A – C: Specified countries or jurisdictions names and codes

Code

Country or jurisdiction

AFG

Afghanistan

ALA

Aland Islands

ALB

Albania

DZA

Algeria

ASM

American Samoa

AND

Andorra

AGO

Angola

AIA

Anguilla

ATA

Antarctica

ATG

Antigua and Barbuda

ARG

Argentina

ARM

Armenia

ABW

Aruba

AUT

Austria

AZE

Azerbaijan

BHS

Bahamas

BHR

Bahrain

BGD

Bangladesh

BRB

Barbados

BLR

Belarus

BEL

Belgium

BLZ

Belize

BEN

Benin

BMU

Bermuda

BTN

Bhutan

BOL

Bolivia

BES

Bonaire, Saint Eustatius and Saba Islands

BIH

Bosnia and Herzegovina

BWA

Botswana

BVT

Bouvet Island

BRA

Brazil

IOT

British Indian Ocean Territory

VGB

British Virgin Islands

BRN

Brunei Darussalam

BGR

Bulgaria

BFA

Burkina Faso

BDI

Burundi

KHM

Cambodia

CMR

Cameroon

CAN

Canada

CPV

Cape Verde

CYM

Cayman Islands

CAF

Central African Republic

TCD

Chad

CHL

Chile

CHN

China

CXR

Christmas Island

CCK

Cocos (Keeling) Islands

COL

Colombia

COM

Comoros

COD

Congo, Democratic Republic of (was Zaire)

COG

Congo, People's Republic of

COK

Cook Islands

CRI

Costa Rica

CIV

Côte D'Ivoire (Ivory Coast)

HRV

Croatia (Hrvatska)

CUB

Cuba

CUW

Curacao

CYP

Cyprus

CZE

Czech Republic

D – M: Specified countries or jurisdictions names and codes

Code

Country or jurisdiction

DNK

Denmark

DJI

Djibouti

DMA

Dominica

DOM

Dominican Republic

TLS

East Timor (Timor Leste)

ECU

Ecuador

EGY

Egypt

SLV

El Salvador

GNQ

Equatorial Guinea

ERI

Eritrea

EST

Estonia

ETH

Ethiopia

FLK

Falkland Islands (Malvinas)

FRO

Faroe Islands

FJI

Fiji

FIN

Finland

FRA

France

GUF

French Guiana

PYF

French Polynesia

ATF

French Southern Territories

GAB

Gabon

GMB

Gambia

GEO

Georgia

DEU

Germany

GHA

Ghana

GIB

Gibraltar

GRC

Greece

GRL

Greenland

GRD

Grenada

GLP

Guadeloupe

GUM

Guam

GTM

Guatemala

GGY

Guernsey

GIN

Guinea

GNB

Guinea-Bissau

GUY

Guyana

HTI

Haiti

HMD

Heard and McDonald Islands

VAT

Holy See (Vatican City State)

HND

Honduras

HKG

Hong Kong

HRV

Hrvatska (Croatia)

HUN

Hungary

ISL

Iceland

IND

India

IDN

Indonesia

IRN

Iran

IRQ

Iraq

IRL

Ireland

IMN

Isle of Man, The

ISR

Israel

ITA

Italy

CIV

Ivory Coast (Côte D'Ivoire)

JAM

Jamaica

JPN

Japan

JEY

Jersey

JOR

Jordan

KAZ

Kazakhstan

KEN

Kenya

KIR

Kiribati

PRK

Korea, Democratic People's Republic of (North Korea)

KOR

Korea, Republic of (South Korea)

KWT

Kuwait

KGZ

Kyrgyzstan

LAO

Laos

LVA

Latvia

LBN

Lebanon

LSO

Lesotho

LBR

Liberia

LBY

Libya

LIE

Liechtenstein

LTU

Lithuania

LUX

Luxembourg

MAC

Macau

MKD

Macedonia, The Former Yugoslav Republic of

MDG

Madagascar

MWI

Malawi

MYS

Malaysia

MDV

Maldives

MLI

Mali

MLT

Malta

MHL

Marshall Islands

MTQ

Martinique

MRT

Mauritania

MUS

Mauritius

MYT

Mayotte

MEX

Mexico

FSM

Micronesia, Federated States of

MDA

Moldova

MCO

Monaco

MNG

Mongolia

MNE

Montenegro

MSR

Montserrat

MAR

Morocco

MOZ

Mozambique

MMR

Myanmar (was Burma)

N – Z: Specified countries or jurisdictions names and codes

Code

Country or jurisdiction

NAM

Namibia

NRU

Nauru

NPL

Nepal

NLD

Netherlands

NCL

New Caledonia

NZL

New Zealand

NIC

Nicaragua

NER

Niger

NGA

Nigeria

NIU

Niue

NFK

Norfolk Island

MNP

Northern Mariana Islands

PRK

North Korea

NOR

Norway

OMN

Oman

PAK

Pakistan

PLW

Palau

PSE

Palestinian Territories

PAN

Panama

PNG

Papua New Guinea

PRY

Paraguay

PER

Peru

PHL

Philippines

PCN

Pitcairn Island

POL

Poland

PRT

Portugal

PRI

Puerto Rico

QAT

Qatar

REU

Reunion

ROU

Romania

RUS

Russian Federation

RWA

Rwanda

BLM

Saint Barthélemy

SHN

Saint Helena

KNA

Saint Kitts and Nevis

LCA

Saint Lucia

MAF

Saint Martin (French Part)

SXM

Saint Martin (Dutch Part)

SPM

Saint Pierre and Miquelon

VCT

Saint Vincent and The Grenadines

WSM

Samoa

SMR

San Marino

STP

Sao Tome and Principe

SAU

Saudi Arabia

SEN

Senegal

SRB

Serbia

SYC

Seychelles

SLE

Sierra Leone

SGP

Singapore

SVK

Slovakia (Slovak Republic)

SVN

Slovenia

SLB

Solomon Islands

SOM

Somalia

ZAF

South Africa

SGS

South Georgia and the South Sandwich Islands

KOR

South Korea

SSD

South Sudan

ESP

Spain

LKA

Sri Lanka

SDN

Sudan

SUR

Suriname

SJM

Svalbard and Jan Mayen Islands

SWZ

Swaziland

SWE

Sweden

CHE

Switzerland

SYR

Syria

TWN

Taiwan

TJK

Tajikistan

TZA

Tanzania

THA

Thailand

TLS

Timor-Leste (East Timor)

TGO

Togo

TKL

Tokelau

TON

Tonga

TTO

Trinidad and Tobago

TUN

Tunisia

TUR

Turkey

TKM

Turkmenistan

TCA

Turks and Caicos Islands

TUV

Tuvalu

UGA

Uganda

UKR

Ukraine

ARE

United Arab Emirates

GBR

United Kingdom

USA

United States

UMI

United States Minor Outlying Islands

VIR

United States Virgin Islands

URY

Uruguay

UZB

Uzbekistan

VUT

Vanuatu

VAT

Vatican City State (Holy See)

VEN

Venezuela

VNM

Vietnam

WLF

Wallis and Futuna Islands

ESH

Western Sahara

YEM

Yemen

ZMB

Zambia

ZWE

Zimbabwe

Appendix 3: Listed country names and codes

Listed country names and codes

Code

Listed country

CAN

Canada

FRA

France

DEU

Germany

JPN

Japan

NZL

New Zealand

GBR

United Kingdom of Great Britain and Northern Ireland

USA

United States of America

Appendix 4: Activity codes

Activity codes

Activity
code

Activity code description

1

Administrative services

Activities that relate to an entity's operations but excluding activities relating to financing and production. These activities include:

  • management services
  • back office services
  • administrative services associated with recharge amounts
  • accounting services
  • IT support services
  • human resources
  • legal
  • accounting.

 

2

Advisory services

Activities involving the provision and receipt of professional advice where a fee is paid for the advice, including:

  • consultancy activities
  • investment advice
  • legal advice.

 

3

Asset management

Activities associated with the management of assets, funds or investments. This will be undertaken on a discretionary basis in accordance with an investment strategy, with the entity responsible for:

  • acquiring, monitoring, managing and disposing of traditional and alternate financial products held by the taxpayer or a related party
  • assessing, monitoring and managing the market risks associated with holding these financial products.

 

4

Borrowing and lending

Activities involving the generation of internal and external funding.

5

Brokerage

Activities involving the mediation between a buyer and a seller, occurring in a range of products, including:

  • mortgages, where brokers act as intermediaries to sell mortgage loans on behalf of individuals or businesses
  • commodities, where brokers execute orders to buy or sell commodity contracts on behalf of clients
  • investment, where brokers act as intermediaries between investment buyers and sellers.

 

6

Cash & trade services

Activities involving the facilitation of fund transfers and the exchange of goods and services, including:

  • cash management systems (payment processing systems)
  • foreign exchange clearing services
  • trade settlements
  • letters of credit (trade, insurance and export).

 

7

Construction

All construction activities including residential and commercial construction and the construction of utilities and infrastructure.

8

Custody and transaction clearing services

Custody is all activities that are associated with the safekeeping of securities for customers, also includes the collection of dividends, interest and proceeds from securities sales.

Transaction clearing are all activities associated with the management of post-trading, pre-settlement credit exposures, to ensure that trades are settled in accordance with market rules, including:

  • reporting and monitoring
  • risk margining
  • netting of trades to single positions.

 

9

Derivatives

Activities undertaken in respect of derivatives (a financial instrument derived from some other asset, index, event, value or condition). The overall derivatives market has five major classes of underlying asset:

  • interest rate derivatives (for example, interest rate swaps or options)
  • foreign exchange derivative (for example, currency swaps or options)
  • credit derivatives (for example, credit default swaps or options)
  • equity derivatives (for example, equity swaps or warrants)
  • commodity derivatives (for example, commodity swaps or gold options).

 

10

Distribution and sale of goods

Goods purchased by a distributor from an international related party.

11

Financing activities

Activities involving dealings in financial instruments that would qualify as financial assets or financial liabilities under relevant Australian accounting standards or comparable foreign accounting standards but excludes financial instruments that would meet the definition of a derivative. At the time of this publication, the two key Australian accounting standards relevant to this question include:

  • AASB 132 Financial Instruments: Presentation
  • AASB 139 Financial Instruments: Recognition and Measurement.

The relevant amounts may be reported in the financial statements as revenue and gains or expenses and losses, depending on the accounting treatment of your relevant financial assets and financial liabilities (this includes amounts relating to hedging items that are classified in the financial statements as financial assets or financial liabilities). Therefore, for the purposes of this activity code:

  • expenditure and losses are interchangeable
  • revenue and gains are interchangeable.

 

12

Guarantees

Activities associated with contracts under which a party agrees to perform an obligation or discharge a liability of another entity should that entity fail to do so.

13

Insurance and reinsurance

Insurance and reinsurance activities include general insurance, life insurance and health insurance.

14

Leasing

Activities that relate to agreement between two parties under which one is granted the right to use the property of the other for a specified period of time in return for a series of payments by the user to the owner.

15

Licensing or transfer of intellectual property

Activities involving an intellectual property rights owner (licensor) and another entity which is given authorisation to use these rights (licensee) in exchange for an agreed payment (fee or royalty). This includes activities involving:

  • technology license agreements
  • trademark licensing agreements
  • copyright license agreements
  • trademark license agreements
  • franchise agreements
  • sales or purchase of IP.

 

16

Logistics

Activities associated with the managing of a commercial organisation’s supply chain that supports the sourcing, timing and movement of goods and services, including:

  • shipping
  • transport
  • storage
  • procurement and sourcing
  • freight
  • scheduling.

 

17

Manufacturing and sale of goods

Activities involved in the sale of goods created by a manufacturing process (excluding agriculture).

18

Media, telecommunications and information services

With regard to media and information services, activities associated with the creation, collation, dissemination and distribution of content via:

  • television
  • radio
  • newspapers, journals or magazines (hardcopy and equivalent electronic versions)
  • books (both hardcopy and equivalent electronic versions)
  • CD and DVD
  • internet
  • other information and communication channels.

With relation to Telecommunications, activities associated with the operation, management, maintenance and sale of access to telecommunications infrastructure and networks including:

  • telephony
  • fax or data
  • digital cable and satellite television
  • internet.

 

19

Primary production/extraction and sale of goods

Activities involved in the sale of physical products that have resulted from:

  • the growing of crops, raising of animals, growing and harvesting of timber
  • the extraction of naturally occurring mineral solids, such as coal and ores; liquid minerals, such as crude petroleum; and gases, such as natural gas.

 

20

Purchase and distribution of goods

Goods sold by a distributor to an international related party.

21

Purchase and manufacture of goods

Activities associated with the purchase of goods to be used in a manufacturing process (excluding agriculture).

22

Receipt/payment of dividends and distributions from trusts and partnerships

23

Retail trade

Activities associated with the retail trade of all goods classifications to end customers through a shopfront or e-commerce website.

24

Sales and marketing services

Sales:

  • commission and amounts received or paid in respect of the provision of services to facilitate the sale of goods or services
  • amounts received or paid in respect of transaction, investment and information services carried out on behalf of customers relating to the customer’s securities, financial assets, financial liabilities, portfolios and other assets.

Marketing:

  • activities that involve acquiring new customers or businesses and maintaining a relationship with them, including
  • advertising
  • brand promotion
  • sales strategies
  • customer support services.

 

25

Securitisation services

Activities involving the packaging of an income by the party entitled to it and the subsequent sale of such income stream to investors.

26

Software and information technology services

Activities involved in the support and maintenance of software and technology used by the taxpayer. Activities relating to the ownership of the software and technology are excluded, such as leasing and rental fees.

27

Superannuation

Activities associated with providing, funding or offering investment strategies for financial security upon retirement.

28

Technical services

Activities involving:

  • engineering
  • project management
  • R&D
  • exploration.

 

29

Toll manufacturing services

Activities involved with the provision of manufacturing services for a fee or price per unit payment, where the manufacturing entity does not take legal title to the inventory or finished goods.

30

Treasury related services

Activities involved in the managing of the taxpayer's financial operations, including:

  • transaction, investment and information services relating to securities, financial assets, financial liabilities, portfolios and other assets held by yourself or an international related party
  • risk management systems development and review
  • the management of currencies and cash flows
  • complex strategies, policies and procedures relating to the taxpayer finance.

 

31

Underwriting services

Activities involves measuring risk exposure and determining the premium that needs to be charged to insure that risk, including:

  • securities underwriting (underwriter assumes risk in bringing the issue to market by guaranteeing the issuer will receive a certain price when the offering is sold to investors)
  • bank underwriting (underwriting is the detailed credit analysis preceding the granting of a loan, based on credit information furnished by the borrower).

Insurance underwriting should be reported under activity code 13 – insurance and reinsurance.

32

Utilities and infrastructure

Activities associated with the operation and management of utilities (for example, electricity, gas, water, sewerage) and infrastructure (for example, roads, rail, airports, sea ports).

99

Other

All other activities not listed above.

Appendix 5: Main pricing methodologies

The arm's length pricing methodologies should be identified using the codes listed below.

Main pricing methodologies

Code

Arm's length pricing method

1

Apportionment of costs

This pricing method apportions the costs associated with a controlled transaction among the associated enterprises. However, cases may arise where neither comparable dealings nor data are available to apply to traditional, or profit-based, methods. In these instances, application of an indirect method such as apportionment of costs on the basis of a formula may be applicable.

2

Apportionment of income

This pricing method apportions the income associated with a controlled transaction among the associated enterprises.

As with code 1, this method may be appropriate where there are neither comparable dealings nor data to apply the traditional, or profit-based, methods to the pricing problem.

3

Comparable uncontrolled price method

This traditional transfer pricing method compares the price for property or services transferred in a controlled transaction, that is, with a related international party, to the price that is charged for comparable property or services under the same or similar circumstances in an uncontrolled transaction.

Where it is possible to locate comparable uncontrolled transactions, the comparable uncontrolled price method is the most direct and reliable way to apply the arm's length principle. If there is any difference between the prices or the terms or nature of the controlled transaction and the uncontrolled transaction, this may indicate that the dealings of the associated enterprises are not arm's length.

Note that intangible and intellectual property transactions present particular problems with regard to comparability, especially where such property is unique or specialised.

If you use this method but the comparable uncontrolled price is adjusted to allow for particular circumstances of the controlled dealing, you should still record the adjusted price under this code.

4

Cost-contribution arrangement

A cost-contribution arrangement is one where members of a multinational group act in concert for the benefit of each of the participants to:

  • produce or provide goods, intangible property or services
  • acquire these jointly from a third party
  • agree to share the actual costs and risks undertaken.

Each participant bears a fair share of the costs and is entitled to receive a fair share of rewards. The concept is akin to a joint venture or partnership.

To be consistent with the arm's length principle, the contributors must be satisfied that they can obtain an acceptable rate of return within a timeframe that takes into account their financial and business circumstances.

For more information, see Taxation Ruling TR 2004/1 Income tax: international transfer pricing – cost contribution arrangements.

5

Cost-plus method

This is a traditional transfer pricing methodology. The cost-plus method begins with the costs incurred by the supplier of property or services in a controlled transaction for property transferred or services provided to a related purchaser. An appropriate arm's length cost-plus mark-up is then added to this cost to make an appropriate profit in light of the functions performed and the market conditions. What is arrived at after adding the arm's length cost-plus mark-up to the above costs may be regarded as an arm's length price of the original controlled transaction.

This method is probably most useful if:

  • semi-finished goods that are subject to additional manufacturing or assembly are sold between related parties
  • related parties have concluded joint facility agreements or long-term buy-and-supply arrangements
  • the controlled transaction is the provision of services.

This method is not suited for high value intangibles.

Further analysis can be undertaken by reviewing the cost plus mark-up of the supplier in the controlled transaction. This is done by referencing the cost plus mark-up that the same supplier earns in comparable uncontrolled transactions. The cost plus mark-up that would have been earned in comparable transactions by an independent enterprise may serve as guidance.

If a fixed percentage mark-up is applied to the relevant cost base without any benchmarking of that percentage against comparable independent dealings, it is not regarded as cost-plus method.

6

Fixed mark-up applied to cost

This method determines the transfer price for a controlled transaction by applying a fixed percentage mark-up to a relevant cost base where the mark-up is not benchmarked against comparable independent dealings. The absence of benchmarking distinguishes this method from the cost-plus method discussed at code 5.

The fixed mark-up applied to cost code should be used as described by TR 1999/1 Income tax: international transfer pricing for intra-group services has been utilised to set the pricing of intra group services.

7

Fixed percentage of resale price

This pricing method determines the transfer price for a controlled transaction as a fixed percentage of the resale price, where the fixed percentage chosen is not benchmarked against the gross margins earned in comparable independent dealings.

The absence of benchmarking distinguishes this method from the resale price method, code 10.

The fixed percentage of resale price methodology code should be used as described by TR 1999/1 Income tax: international transfer pricing for intra-group services has been utilised to set the pricing of intra group services.

8

Marginal costing

Marginal costing applies only the variable production costs to the costs of a product. This method is often used by companies and multinational enterprise groups for internal cost accounting and management control purposes. Its use in setting transfer prices on international dealings between associated enterprises for tax purposes is acceptable only if pricing on the basis of marginal costs represents an arm's length outcome for the transfer of goods or services into the particular market.

9

Profit split method

This is a transactional profit methodology. The profit split method determines the appropriate pricing for transactions by:

  • identifying the combined profit or loss from the dealings between the related parties
  • splitting that combined profit or loss between the related parties.

The split of profit or loss between the parties must be made on an economically valid basis that approximates the division of profits in an agreement made at arm's length.

10

Resale price method

This traditional transfer pricing method may be appropriate where an enterprise sells a product to a related party who then resells that product to an independent third party.

The resale price is reduced by the arm's length resale price margin and may then be regarded after adjustments for other costs associated with the original purchase of the product as an arm's length price of the original transfer of property between the related parties.

Further analysis can be undertaken by reviewing the resale price margin of the reseller in the controlled transaction. This is done by referencing the resale price margin that the same reseller earns on items purchased and sold in comparable uncontrolled transactions. The resale price margin earned by an independent enterprise in comparable uncontrolled transactions may also provide guidance.

Margins are usually measured at gross profit level, however a comparison undertaken at an intermediate level may be more accurate. A comparison at the net profit level falls under a different methodology – the transactional net margin method.

The resale price margin will vary depending on the value added by the reseller. Variables such as functions performed, economic circumstances, assets employed, and risks undertaken should reflect higher margins.

11

Transactional net margin method

This is a transactional profit methodology. The transactional net margin pricing method is based on comparisons made at the net profit level between the taxpayer and independent parties in relation to a comparable transaction or dealing. It examines the net profit margin relative to an appropriate base (for example, costs, sales or assets) that a taxpayer realises from a controlled transaction.

Comparisons at the net profit level can be made on a single transaction or in relation to some aggregation of dealings between associated enterprises.

12

Transactional net margin method (whole-of-entity)

The transactional net margin method is discussed at code 11. If after exercising commercial judgement you have decided to aggregate and test the arm’s length nature of multiple international related party dealings through the application of the transactional net margin method on a whole-of-entity basis, then use code 12 as the main pricing methodology.

See Appendix 9 for when to use Transactional net margin method (whole-of-entity) methodology.

13

Other arm's length methods

Use code 13 if your arm's length method is not represented by codes 1 to 12.

14

No transfer pricing method used

Use code 14 if no principal transfer pricing method has been used.

Appendix 6: Derivative codes

The type of derivative should be identified using the codes listed below.

Derivative codes

Code

Type of derivative

1

Cross currency interest rate swap

2

Currency derivative (not cross currency interest rate swap) including currency swap, forward, future or option

3

Fixed for floating interest rate swap (not cross currency)

4

Other interest rate derivative (not cross currency)

5

Credit default swap

6

Commodity derivative including commodity swap, forward, future or option

7

Other asset swap

8

Other derivative

Appendix 7: Nature of item codes

Nature of item codes

Item code

Item code description

1

Company shares

2

Contract manufacturing

3

Contractual interests

4

Deposits/investment assets

5

Derivative portfolio

6

Insurance policies

7

Insurance recapitalisation

8

Intellectual property/intangibles

9

Interests in trust, partnership or other entity type

10

Loan assets

11

Loan liabilities

12

Marketing hubs

13

Real property

14

Shared services

15

Shipping

16

Trading activities

17

Other assets

18

Other functions

19

Other liabilities

20

Other risks

Where you believe that more than one item code may apply, use the most appropriate code.

The terms used in these codes should be interpreted in accordance with their ordinary meaning as used in the context of the industry to which the term relates.

Appendix 8: Transferor trust exemption codes

Transferor trust exemption codes

Code

Subsection/section

1

102AAT(1)(a)(i)(A) to (D)

The transfer was:

  • made to a non-resident discretionary trust
  • an arm's length transaction undertaken in the ordinary course of business.

 

2

102AAT(1)(a)(i)(A) to (C) & (E)

The transfer was:

  • made to a non-resident discretionary trust
  • an arm's length transaction not undertaken in the ordinary course of business
  • neither the transferor nor its associates were in a position to control the trust (from the time of the transfer until the end of the transferor's current year of income).

 

3

102AAT(1)(a)(i)(A) to (C) & (F)

The transfer was:

  • made to a non-resident discretionary trust
  • made either on or before 12 April 1989
  • neither the transferor nor its associates were in a position to control the trust (from 12 April 1989 until the transferor's current year of income).

This exemption will not apply to transfers made in the last three income years.

4

102AAT(1)(a)(ii)(A) to (C)

The transfer was:

  • made to a non-resident non-discretionary trust
  • made either on or after 12 April 1989
  • for a consideration equal to or greater than the arm's length amount.

 

5

102AAT(1)(a)(ii)(A), (B) & (D)

The transfer was:

  • made to a public unit trust (that is a non-resident trust estate)
  • made either on or after 12 April 1989
  • for a consideration equal to or greater than the arm's length amount
  • the sole purpose of the transaction was the arm's length acquisition of units in a public unit trust.

 

6

102AAZE

De minimis exemption

The transfer was made to a non-resident trust that is a resident of a listed country and the total of the attributable incomes of all non-resident trust estates is equal to or less than the lesser of either:

  • $20,000
  • 10% of the total of the net incomes of the trust estates.

 

Appendix 9: Percentage of dealings with documentation

Percentage of dealings with documentation' refers to the aggregate dollar amount of transactions reported at specific questions in the schedule for which you have relevant documentation expressed as a percentage of total dollar value of transactions reported at each specific question.

If your relevant related party dealings meet the conditions for one of the simplified record keeping options in PCG 2017/2, use code 7 for the dealings for which you decide to apply the simplified record-keeping option. The simplified record-keeping options available are:

  • Materiality – applicable revenue related dealings
  • Small taxpayers – applicable revenue related dealings
  • Distributors – applicable revenue related dealings
  • Intra group services – applicable services related party dealings
  • Management and administration services – applicable management and administration services related party dealings
  • Technical services – applicable technical services related party dealings
  • Low level loans – applicable inbound international related-party interest-bearing loans and associated expenses

Transfer pricing documentation

For income years commencing on or after 29 June 2013, section 284-250 of Schedule 1 to the Taxation Administration Act 1953 provides that a particular way of applying Subdivision 815-B of the ITAA 1997 is not reasonably arguable for the purpose of applying Division 284 of Schedule 1 to the Taxation Administration Act 1953 (concerning administrative penalties) unless the entity meets the documentation requirements in section 284-255.

In order for the documentation requirements in section 284-255 to be met, certain factual matters set out in subsection 284-255(2) must be readily ascertained from records that meet the requirements of subsection 284-255(1).

TR 2014/8 sets out our views on the documentation requirements in section 284-255.

It is recommended at paragraphs 80 to 121 of TR 2014/8 that the following five key questions be considered when documenting your transfer pricing treatment in light of your facts and circumstances:

  1. What are the actual conditions that are relevant to the matter?
  2. What are the comparable circumstances relevant to identifying the arm's length conditions?
  3. What are the particulars of the methods used to identify the arm's length conditions?
  4. What are the arm's length conditions and is the transfer pricing treatment appropriate?
  5. Have any material changes and updates been identified and documented?

If you meet the documentation requirements of Subdivision 284-E you may lessen the likelihood of the ATO conducting a transfer pricing review.

The selection of arm's length pricing methods for your related-party international dealings is discussed in TR 98/11.

Contemporaneous documentation

Documentation is contemporaneous if:

  • it is existing or brought into existence either  
    • at the time you are developing or implementing any arrangement that might raise transfer pricing issues
    • when you are reviewing these arrangements prior to or at the time of the preparation of tax returns
     
  • the documentation records information relevant to determining the arm’s length conditions for the purpose of applying Division 815 of the ITAA 1997.

The documentation may be in the form of books, records, studies, budgets, plans and projections, analyses, conclusions and other material that record the information. It may be in electronic or written form.

The initial analysis of your international dealings for the purpose of determining the arm's length conditions for those dealings will have been carried out and documented at the time of engaging in the dealings. To review those international dealings before you prepare your tax returns is prudent business practice.

To determine the code for the percentage of your dealings with international related parties

At F items 5 to 13 and 17, write the relevant code from the table below for:

  • the percentage of your dealings with international related parties for which you have the relevant written documentation; it is not a requirement for the purposes of selecting the code that relevant written documentation meets all the requirements of Subdivision 284-E of Schedule 1 to the Taxation Administration Act 1953

or

  • code 7 for your dealings shown at items 5, 7, 8 or 11c for which you applied one of the simplified record-keeping options in PCG 2017/2.

If after exercising commercial judgement you have decided to aggregate and test multiple international related party dealings through the application of the transactional net margin method on a whole-of-entity basis, then do both of the following:

  • write code 12 at E to show transactional net margin method on a whole-of-entity as the main pricing methodology.
  • write the applicable code from the table below at label F to indicate the percentage of dealings with documentation for questions 5 to 13, and 17.

If, in exercising your commercial judgement you decide not to apply a whole of entity transactional net margin method analysis, you should test and document your international related party dealings separately and use one of the codes from the table below to show the percentage of the total of the dollar value for which you have documentation.

Percentage of total dollar value

Code

Percentage

1

0%

2

1% to less than 25%

3

25% to less than 50%

4

50% to less than 75%

5

75% to less than 100%

6

100%

7

Applied simplified record keeping option in PCG 2017/2

You may calculate the percentage on the basis of a reasonable estimate.

A statistical sample may be an appropriate method of calculating the relevant percentage, provided the sample selection and mathematical consideration are consistent with generally accepted statistical methods.

Keep your working papers if you have used a sampling process to make this estimate.

Appendix 10: Capital asset pricing methodologies

The capital asset pricing methodologies should be identified using the codes listed below.

Capital asset pricing methodologies

Code

Pricing method

1

Cost price

2

Directors valuation

3

Discounted cash flow

4

Independent valuation

5

Nil consideration

6

Quoted market price

7

Written-down value

8

Other methods

Cost price is the price the seller originally paid for the asset, including ancillary costs such as freight or handling.

Written-down value is a pricing method based on either the taxation 'adjustable value' or accounting residual value after depreciation has been allowed.

Discounted cash flow is a pricing method where the price of an asset is based on the discounted cash flow at the time of acquisition or disposal.

Director's valuation is a pricing method that is based on the directors' opinion of an asset's value, and not on any of the other methods listed in codes 1 to 8.

Independent valuation is a pricing method by which a suitably qualified person, acting at arm's length to both the buyer and seller, assesses the value of an asset.

Quoted market price is a price quoted on a public listed market, such as a public stock exchange, or commodities market.

Other methods are any other pricing method that is not mentioned in Appendix 5.

The above pricing methods may not provide an arm's length price under all circumstances. The above examples are not an exhaustive list.

Appendix 11: Capital value of a restructure

Use one of the following numeric codes to state the total of the dollar value of the restructure.

Total dollar value of restructure

Code

Range

1

$0 to less than $10 million

2

$10 million to less than $50 million

3

$50 million to less than $100 million

4

$100 million to less than $500 million

5

$500 million or greater

The dollar amounts or values asked for in this question are all based on your existing accounting records. For these transactions we ask you to make a reasonable determination of the value and we do not expect you to obtain a formal valuation for this purpose. Keep your working papers if you have made a reasonable determination.

Appendix 12: Transaction types for which foreign exchange gain returned or foreign exchange loss deducted

Use the following transaction types for reporting of international related party dealings for which you have returned a foreign exchange gain or deducted a foreign exchange loss shown at item 11g.

The reference in the table to debt interests is to debt interests under Division 974 of the ITAA 1997. For more guidance on what is a debt interest under Division 974, see Guide to the debt and equity tests.

Transaction types for which foreign exchange gain returned or foreign exchange loss deducted

Code

Transaction type

1

IRP ordinary borrowings

2

IRP ordinary loans

3

IRP trade related liabilities

4

IRP trade related receivables

5

IRP other debt interests issued

6

IRP other debt interests acquired

7

Other IRP liabilities/payables

8

Other IRP assets/receivables

Appendix 13: Currency codes

Currency codes for foreign exchange gain returned or foreign exchange loss deducted, or main currency of the notional amount taken to be borrowed under section 160ZZZ

Currency code

Currency

USD

US Dollar

EUR

Euro

GBP

British Pound

JPY

Japanese Yen

CNY

Chinese Yuan Renminbi

KRW

South Korean Won

NZD

New Zealand Dollar

AED

UAE Dirham

HKD

Hong Kong Dollar

CAD

Canadian Dollar

MYR

Malaysian Ringgit

SEK

Swedish Krona

INR

Indian Rupee

CHF

Swiss Franc

SGD

Singapore Dollar

AUD

Australian Dollar, if functional currency under Subdivision 960-D is not AUD

Appendix 14: Type of hub

Hub type codes for offshore dealings subject to the schedules within PCG 2017/1

Code

Type of hub

MKT

Marketing hub

SHI

Shipping hub

SER

Services hub

SAL

Sales hub

NCP

Non-Core procurement hub

CPR

Core procurement hub

QC55230