Australia Defines Transfer Pricing Rules for Business Restructuring

Top Quote The Australian Tax Offices (ATO) has set out new rules on transfer pricing for business restructuring by multinational enterprises. End Quote
  • (1888PressRelease) June 24, 2011 - Sunnyvale, CA - The ruling defines 'business restructuring' as arrangements of multinational enterprises by which functions, assets and /or risks of a business are transferred between jurisdictions.

    The ATO requires a documented business case for the restructure explaining its commercial rationale, both from a group perspective and also showing how it affects the Australian entity and to ensure its benefits. Proper documentation evidencing the arrival of an arm's length price for the restructure and post-restructure arrangements must also be maintained.


    The ruling focuses on three main types of dealings:
    a transfer of property 
    supply of benefit and
    whether a tax payer, viewed as an independent party, would have a right to compensation for termination of its existing arrangements.

    Permanent establishment issues arising from business restructuring are however not addressed in this ruling. It only applies to the application of the transfer pricing provisions and does not address the application of other provisions in the Australian tax law that may be relevant in the facts and circumstances of a particular business restructuring arrangement.

    The rules permit adjustment to a taxpayer's profits where the conditions of the taxpayer's commercial or financial relations with an associated enterprise in respect of a business restructuring differ from those which would be made between independent enterprises dealing wholly independently with each other and results in profits not accruing to the taxpayer that would otherwise have accrued.


    About Nair & Co.
    Nair & Co. provides an integrated solution in the HR, finance, tax, compliance and legal arenas making a company's overseas operations less risky, stress free and more strategic. It currently has 740+ client operations in over 50 countries with offices in U.K., India, China, U.S., Japan and Singapore. Nair & Co. was named among the top 100 outsourcing services providers in the world by the International Association of Outsourcing Professionals (IAOP).

    Learn more at

  • FB Icon Twitter Icon In-Icon
Contact Information