The Australian government has released an Exposure Draft outlining the proposed retrospective amendments that will be implemented during the first stage of reform to the country’s transfer pricing regime. The piecemeal approach to reform will include a second stage involving a fundamental rewrite of the transfer pricing rules. The rewrite is currently underway, with the new rules for future transfer pricing expected to be released soon. The rules governing such transactions have not been materially amended for 30 years, since their first introduction in 1982.
According to the government, an overarching goal of the first stage of reform is to provide clarity and certainty regarding the applicability of transfer pricing articles in Australia’s tax treaties, with authority independent from Division 13 of the Income Tax Act 1936. Furthermore, the government will seek to require consistent interpretation of the arm’s length principle, with relevant Organization for Economic Cooperation and Development (OECD) guidance. These amendments will apply to income years commencing on or after July 1, 2004.