TaxNewsFlash-Transfer Pricing

December 4, 2009
No. 2009-79

Australia: Significant Ramping Up of Transfer Pricing Compliance Activities Expected of Tax Authorities by Early 2010

In Australia’s Federal Budget 2009-10, the Australian Taxation Office (ATO) was given additional funding of AUS $300 million over four years to determine that, as Australia's economy recovers, wealthy Australians and large and medium sized businesses continue to meet their tax obligations. A substantial part of the additional funding to be provided to the ATO was to address potential transfer pricing risks as the economy recovers. It was also provided to enable the ATO to build additional transfer pricing capability.

Current Status

This week the ATO provided details of how it is spending the additional funding:

Building additional transfer pricing capability in the ATO through external recruitment of people with transfer pricing and industry-specific experience Significantly increasing transfer pricing compliance activities over the next four years

Building additional transfer pricing capability in the ATO

The ATO has used the additional funding to recruit new staff who will focus exclusively on transfer pricing compliance. The ATO expects to staff the project with up to 100 people and currently has recruited 40 people. A new round of recruiting is expected to be undertaken in 2010.

Significantly increasing transfer pricing compliance activities over the next four years

The ATO is launching a new transfer pricing project that will be additional to the current “business as usual” activity. Key details associated with the project over its four year life include:

200 letters/information requests to be issued
140 letters/information requests to be issued in January and February 2010 (10 letters have been issued early)
100 risk products expected to be used
30 audits/APAs expected to be commenced

The letters/information requests to be issued in January and February 2010 will be specific enquiry letters (rather than focusing on existing transfer pricing documentation) and will focus on the following areas:

Business restructures
Related-party loans and guarantee arrangements
Foreign banks
The impact of the global financial crisis
Services to the mining industry

The ATO has indicated that companies issued with letters/information requests have been selected after a detailed internal risk-profiling.

ATO transfer pricing compliance teams for the project will be based in Sydney, Melbourne, Brisbane, and Perth.

For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group in Australia:

In Sydney:
Anthony Seve, +61 2 9335 8728, aseve@kpmg.com.au

Tony Gorgas, +61 2 9335 8851, tgorgas@kpmg.com.au

Arthur Begetis, +61 2 9335 7233, abegetis@kpmg.com.au

Glen Hutchings, +61 2 9455 9015, ghutchings@kpmg.com.au

In Melbourne:
Jane Rolfe, +61 3 9288 6341, janerolfe@kpmg.com.au

Damian Preshaw, +61 3 9288 5658, dpreshaw@kpmg.com.au

Simone Lunny, +61 3 9288 6408, slunny@kpmg.com.au

In Perth:
David Bond, +61 8 9263 7177, dbond@kpmg.com.au

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