Document ID: chunk:federal_register_of_legislation:C2012A00115:clause:1_6:p1
Version: federal_register_of_legislation:C2012A00115
Segment Type: clause
Provision Reference: sch 1 cl 6 (pt 1/6)
Character Range: 1963–4981

6  After Division 802
Insert:

Division 815—Cross‑border transfer pricing

Table of Subdivisions
815‑A Treaty‑equivalent cross‑border transfer pricing rules

Subdivision 815‑A—Treaty‑equivalent cross‑border transfer pricing rules

Guide to Subdivision 815‑A

815‑1  What this Subdivision is about
      The cross‑border transfer pricing rules in this Subdivision are equivalent to, but independent of, the transfer pricing rules in Australia's double tax agreements.

Table of sections

Operative provisions
815‑5 Object
815‑10 Transfer pricing benefit may be negated
815‑15 When an entity gets a transfer pricing benefit
815‑20 Cross‑border transfer pricing guidance
815‑25 Modified transfer pricing benefit for thin capitalisation
815‑30 Determinations negating transfer pricing benefit
815‑35 Consequential adjustments
815‑40 No double taxation

Operative provisions

815‑5  Object
  The object of this Subdivision is to ensure the following amounts are appropriately brought to tax in Australia, consistent with the arm's length principle:
 (a) profits which would have accrued to an Australian entity if it had been dealing at *arm's length, but, by reason of non‑arm's length conditions operating between the entity and its foreign associated entities, have not so accrued;
 (b) profits which an Australian permanent establishment (within the meaning of the relevant *international tax agreement) of a foreign entity might have been expected to make if it were a distinct and separate entity engaged in the same or similar activities under the same or similar conditions, but dealing wholly independently.

815‑10  Transfer pricing benefit may be negated
 (1) The Commissioner may make a determination mentioned in subsection 815‑30(1), in writing, for the purpose of negating a *transfer pricing benefit an entity gets.

Treaty requirement
 (2) However, this section only applies to an entity if:
 (a) the entity gets the *transfer pricing benefit under subsection 815‑15(1) at a time when an *international tax agreement containing an *associated enterprises article applies to the entity; or
 (b) the entity gets the transfer pricing benefit under subsection 815‑15(2) at a time when an international tax agreement containing a *business profits article applies to the entity.

815‑15  When an entity gets a transfer pricing benefit

Transfer pricing benefit—associated enterprises
 (1) An entity gets a transfer pricing benefit if:
 (a) the entity is an Australian resident; and
 (b) the requirements in the *associated enterprises article for the application of that article to the entity are met; and
 (c) an amount of profits which, but for the conditions mentioned in the article, might have been expected to accrue to the entity, has, by reason of those conditions, not so accrued; and
 (d) had that amount of profits so accrued to the entity:
 (i) the amount of the taxable income of the entity for an income year would be greater than its actual amount; or
 (ii) the amount of a tax loss of the entity