Income Tax Assessment Act 1997



Division 815 - Cross-border transfer pricing  

Subdivision 815-C - Arm ' s length principle for permanent establishments  

Operative provisions

SECTION 815-225   Meaning of arm ' s length profits  

The arm ' s length profits for a *PE of an entity are worked out by allocating the actual expenditure and income of the entity between the PE and the entity so that the profits attributed to the PE equal the profits the PE might be expected to make if:

(a) the PE were a distinct and separate entity; and

(b) the activities and circumstances of the PE, including the functions performed, assets used and risks borne by the PE, were those of that separate entity; and

(c) the conditions that operated between that separate entity and the entity of which it is a PE were the *arm ' s length conditions.

The conditions to which the *arm ' s length conditions mentioned in paragraph (1)(c) relate are the conditions that would operate between the separate entity and the entity of which it is a *PE if the assumptions in paragraphs (1)(a) and (b) were made.

For the purposes of subsection (1):

(a) the actual expenditure of an entity is taken to include losses and outgoings; and

(b) the actual income of an entity is taken to include any amount that is, or is to be, included in the entity ' s assessable income.


Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.