Transfer pricing disputes in Australia

Abstract

Australia has a relatively long history in adopting and applying transfer pricing rules. Australia introduced a transfer pricing rule early on and there were some lengthy tribunal decisions in the area in the 1950s and 1960s. More recently, Australia has devoted significant resources to transfer pricing issues, including at the Organisation for Economic Co-operation and Development (OECD) level and in domestic development of administrative guidance and enforcement by the Australian Taxation Office (ATO). Considerable controversy has attended this activity and led to a number of disputes and cases which have reached the public arena. The ATO has largely been unsuccessful on substantive transfer pricing issues in litigation (which is likely to lead to law changes) but successful in matters of procedure (leading to settlement of disputes after taxpayers lost the procedural contest). In addition the ATO has a large advanced pricing arrangements (APAs) programme and is actively involved in the mutual agreement procedure (MAP) on transfer pricing matters but otherwise does not seem to have a specially developed dispute resolution procedure for transfer pricing.