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Transfer pricing policy



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TREASURER

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II 21

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MP

TRANSFER p r i c i n g p o l i c y

The Senate Standing Committee on National Resources, in

its report "The Development of the Bauxite, Alumina and

Aluminium industries", suggests that section 136 of the

Income Tax Assessment Act would be considerably strengthened

if reference in that section to control by non-residents

were removed.

The Section deals generally with tax avoidance in inter­

national business and transactions involving Australian

business controlled by non-residents, including so-called

transfer pricing.

I would like to make it clear that, as I announced in the

Parliament on 27 May last, the Government had already

decided to amend section 136 not only to overcome deficiences

arising out of the control reference, but also to overcome

other difficulties in the transfer pricing area.

Specifically in relation to the existing control tests,

I said -

"Essentially, the new provisions will be applicable to

transactions in respect of which the Commissioner of Taxation,

having regard to any connection between the parties and to

other relevant ciresistances, is satisfied that any parties

to the transaction were nc-t dealing at arm's length with

each other. ;

The provisions will thus be capable of application not only

where the parties are associated in terms of ownership or

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2 .

control, but also where they in fact do not, in a transaction

extending to this country, deal in an arm's length way with

each other."

Details of other proposed changes were given then and do

not need to ba repeated here.

The amendments will be introduced in the Autumn sittings. As . . . .

X stated on 27 May 1981, however, the amendments to section 136

are to apply to expenditure incurred, and to income derived or

that might have been expected to have been derived, after

, i 2*7 May 1981.

Canberra

27/11/81