Transfer Pricing - from Documentation issues to 815A & 815B and Part IVA

Transfer pricing remains a topical issue for taxpayers and revenue authorities in Australia and around the world.

The OECD’s Base Erosion and Profit Shifting (BEPS) project, and Australia’s implementation of many of its recommendations, highlight the importance of transfer pricing to the compliance and governance frameworks of affected taxpayers.

It is also important to recognise that transfer pricing is not just the domain of large multinational enterprises. Affecting Australian headquartered groups expanding overseas, it also impacts Australian subsidiaries of global groups who often have limited resources to deal with detailed transfer pricing issues and documentation requirements.

In response to these issues, The Tax Institute will stage a new event, the National Transfer Pricing Conference, taking place in Sydney in August.

With addresses from thought leaders from both the profession and the Australian Taxation Office, covering difficult technical issues on the migration of intellectual property and the application of Division 815 following Chevron, the Conference also highlight what transfer pricing risks boards must consider in discharging their directors’ duties.

Here we take a closer look at some of the Conference’s key sessions and speakers.

While larger organisations may have the people in-house to devote to Transfer Pricing issues, or the funds to pay external advisers, smaller businesses are faced with an outsized burden of compliance. Recognizing this, the program includes a number of sessions look at the issues facing smaller organisations.

Designed to reduce record-keeping obligations for smaller businesses, the ATO released a new Practical Compliance Guideline PCG 2017/2 Simplified transfer pricing record keeping options, in early 2017.

In the session ‘Simplified Transfer Pricing Documentation Rules’, Lauren Whelan will explore the purpose and history of the rules in Australia and OECD countries, as well as the implications of applying them, including disclosure in tax return and risk to ATO review/ penalties.

Lauren will also look at the eight simplification options explored in PCG 2017/2.

A supervisor who practises in tax compliance and consulting, Lauren has extensive experience in corporate taxation, advising businesses (both publicly and privately owned) across a range of industries.

Diving deeper into documentation issues, Ashish Dave, presents ‘Basics of Transfer Pricing Documentation’.

Ashish will discuss the objective of transfer pricing documentation (TPD), and its history in Australia, looking at Div 13 v Div 815-B and 815-C. Covering the steps in preparing TPD, Ashish will provide an analysis of global group and local entity, and a review of related party dealings, as well as a functional and risk analysis. He will also look at the selection of the most appropriate transfer pricing methodology and the implications of holding TPD, including disclosure in tax returns and the potential risks of an ATO review and penalties.

We now turn to a couple of sessions aimed at larger entities, but that still have relevance to smaller businesses.

Daniel McInerney, CTA, and Caroline Walker co-present the session ‘Transfer Pricing Defined / Legal questions on interpretation 815A – 815B’.

The decision in Chevron and the way the modernised transfer pricing provisions have been written generate a number of legal and interpretive questions. Daniel and Caroline will work through the areas of uncertainty and how these matters might be considered by future court decisions to assist taxpayers and their advisers in making decisions on assessing its transfer pricing risk.

Daniel is a taxation barrister at the Victorian Bar known for his strong technical and advisory knowledge, while Caroline is a Partner in EY’s International Tax team specialising in transfer pricing, with over 18 years’ experience.

Incorrectly characterising international related party dealings can see businesses falling foul of general anti-avoidance laws, and represents some of the largest areas for ATO disputes.

In the session ‘Correct Characterisation and Reconstruction under 815B and Part IVA’ Damian Preshaw, CTA, analyses some of the most frequent areas where international related party dealings are being challenged by the ATO in transfer pricing cases.

He will also look at how 815-B and recent changes to the OECD’s transfer pricing guidelines address the characterisation and reconstruction of international related party dealings.

Highlighting recent trends in Part IVA cases, Damian will cover how businesses can manage anti-avoidance measures for international related party dealings, and look at what steps companies should be taking to document and support their tax governance in the planning phase and post-implementation.

Damian is a transfer pricing specialist with more than 25 years’ experience in both the private sector and with the ATO, and consults to accounting firms and law firms. Prior to establishing Damian Preshaw Consulting Pty Ltd in October 2015, he was a director in KPMG’s Transfer Pricing Services Group in Melbourne for over a decade.

Finally, the Conference looks at the risks involved in Transfer Pricing, and what boards need to know, in the session from Christine Cornish, Chris Vanderkley, CTA, and Philip Beswick.

Increasingly the global view is that tax risk management should be a part of good corporate governance, and this is a view the ATO is embracing too, and the ATO’s high levels of scrutiny regarding transfer pricing matters has increased the importance of building transfer pricing into tax governance frameworks.

The presence and testing of a tax internal control frameworks are becoming an integral part of the risk-assessment protocols used by tax authorities.

In their session, Christine, Chris, and Phil look to provide insight into the ATO’s current approach to tax risk governance. The panel’s members experience will provide insight into implementing tax governance frameworks, addressing ATO governance questions within Justified Trust and Streamlined Assurance reviews as well as effective governance processes required post an ATO review or audit in order to ensure boards are kept appropriately informed.

The National Transfer Pricing Conference takes place 8 August 2018, in Sydney. 

Featuring an opening address from Mark Konza of the Australian Taxation Office, other sessions look at CBC Reporting and Smarter Data, financing and other key ATO risks, and IP Migration Issues. 

Find out more and view the full program on our website.


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