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Simplified Transfer Pricing Record Keeping

Independent Review - Australian Tax Office

On 5 February 2015 the Australian Tax Office (ATO) introduced simplified record keeping options for businesses to comply with transfer pricing record provisions as part of a three-year trial. Transfer pricing is the setting of prices between related parties in order to shift profits and lower tax. The reporting requirements for transfer pricing were imposing an administrative burden on a business disproportionate to its risk of not complying with the transfer pricing rules. The new arrangements offer simplified reporting for small business taxpayers, distributors, intra-group services and low level loans. The ATO has certified that the Division 815 Implementation Project, which includes a discussion paper on options as an equivalent Regulation Impact Statement (RIS) process. The Office of Best Practice Regulation (OBPR) does not assess reviews that have been certified by agencies. The ATO estimates that the average annual regulatory cost saving is $80.9 million. The OBPR has agreed to this estimate of savings. The ATO’s certification of the Division 815 Implementation Project means they are compliant with the Government’s RIS requirements. However, by certifying after the final decision had been made, the ATO did not follow best practice.