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This is a Bill, not an Act. For current law, see the Acts databases.
TAX LAWS AMENDMENT (COUNTERING TAX AVOIDANCE AND MULTINATIONAL PROFIT SHIFTING) BILL 2013
2010-2011-2012-2013
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Tax Laws Amendment (Countering Tax
Avoidance and Multinational Profit
Shifting) Bill 2013
No. , 2013
(Treasury)
A Bill for an Act to amend the law relating to
taxation, and for related purposes
i Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill
2013 No. , 2013
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedule(s) ........................................................................................ 2
Schedule 1--General anti-avoidance rules
3
Income Tax Assessment Act 1936
3
Taxation Administration Act 1953
6
Schedule 2--Modernisation of transfer pricing rules
7
Part 1--Main amendments
7
Income Tax Assessment Act 1936
7
Income Tax Assessment Act 1997
7
Taxation Administration Act 1953
21
Part 2--Other amendments
27
Income Tax Assessment Act 1936
27
Income Tax Assessment Act 1997
28
Taxation Administration Act 1953
32
Part 3--Application
34
Income Tax (Transitional Provisions) Act 1997
34
Part 4--Minor amendments relating to treaty-equivalent
transfer pricing rules
36
Income Tax Assessment Act 1997
36
Taxation Administration Act 1953
36
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 1
A Bill for an Act to amend the law relating to
1
taxation, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act may be cited as the Tax Laws Amendment (Countering
5
Tax Avoidance and Multinational Profit Shifting) Act 2013.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill
2013 No. , 2013
Commencement information
Column 1
Column 2
Column 3
Provision(s)
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1
The day this Act receives the Royal Assent.
3. Schedule 2,
Parts 1 to 3
The day this Act receives the Royal Assent.
4. Schedule 2,
Part 4
Immediately after the commencement of the
Tax Laws Amendment (Cross-Border
Transfer Pricing) Act (No. 1) 2012.
8 September
2012
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedule(s)
7
Each Act that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
General anti-avoidance rules Schedule 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 3
Schedule 1
--
General anti-avoidance rules
1
2
Income Tax Assessment Act 1936
3
1 Paragraph 45B(8)(k)
4
Omit "subparagraphs 177D(b)(i) to (viii)", substitute
5
"subsection 177D(2)".
6
2 At the end of paragraph 177C(1)(bb)
7
Add "or".
8
3 After paragraph 177C(1)(bb)
9
Insert:
10
(bc) the taxpayer not being liable to pay withholding tax on an
11
amount where the taxpayer either would have, or might
12
reasonably be expected to have, been liable to pay
13
withholding tax on the amount if the scheme had not been
14
entered into or carried out;
15
4 At the end of subsection 177C(1)
16
Add:
17
; and (g) in a case to which paragraph (bc) applies--the amount
18
referred to in that paragraph.
19
5 Sections 177CA and 177D
20
Repeal the sections, substitute:
21
177CB The bases for identifying tax benefits
22
(1) This section applies to deciding, under section 177C, whether any
23
of the following (tax effects) would have occurred, or might
24
reasonably be expected to have occurred, if a scheme had not been
25
entered into or carried out:
26
(a) an amount being included in the assessable income of the
27
taxpayer;
28
(b) the whole or a part of a deduction not being allowable to the
29
taxpayer;
30
Schedule 1 General anti-avoidance rules
4 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill
2013 No. , 2013
(c) the whole or a part of a capital loss not being incurred by the
1
taxpayer;
2
(d) the whole or a part of a foreign income tax offset not being
3
allowable to the taxpayer;
4
(e) the taxpayer being liable to pay withholding tax on an
5
amount.
6
(2) A decision that a tax effect would have occurred if the scheme had
7
not been entered into or carried out must be based on a postulate
8
that comprises only the events or circumstances that actually
9
happened or existed (other than those that form part of the
10
scheme).
11
(3) A decision that a tax effect might reasonably be expected to have
12
occurred if the scheme had not been entered into or carried out
13
must be based on a postulate that is a reasonable alternative to
14
entering into or carrying out the scheme.
15
(4) In determining for the purposes of subsection (3) whether a
16
postulate is such a reasonable alternative:
17
(a) have particular regard to:
18
(i) the substance of the scheme; and
19
(ii) any result or consequence for the taxpayer that is or
20
would be achieved by the scheme (other than a result in
21
relation to the operation of this Act); but
22
(b) disregard any result in relation to the operation of this Act
23
that would be achieved by the postulate for any person
24
(whether or not a party to the scheme).
25
177D Schemes to which this Part applies
26
Scheme for purpose of obtaining a tax benefit
27
(1) This Part applies to a scheme if it would be concluded (having
28
regard to the matters in subsection (2)) that the person, or one of
29
the persons, who entered into or carried out the scheme or any part
30
of the scheme did so for the purpose of:
31
(a) enabling a taxpayer (a relevant taxpayer) to obtain a tax
32
benefit in connection with the scheme; or
33
General anti-avoidance rules Schedule 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 5
(b) enabling the relevant taxpayer and another taxpayer (or other
1
taxpayers) each to obtain a tax benefit in connection with the
2
scheme;
3
whether or not that person who entered into or carried out the
4
scheme or any part of the scheme is the relevant taxpayer or is the
5
other taxpayer or one of the other taxpayers.
6
Have regard to certain matters
7
(2) For the purpose of subsection (1), have regard to the following
8
matters:
9
(a) the manner in which the scheme was entered into or carried
10
out;
11
(b) the form and substance of the scheme;
12
(c) the time at which the scheme was entered into and the length
13
of the period during which the scheme was carried out;
14
(d) the result in relation to the operation of this Act that, but for
15
this Part, would be achieved by the scheme;
16
(e) any change in the financial position of the relevant taxpayer
17
that has resulted, will result, or may reasonably be expected
18
to result, from the scheme;
19
(f) any change in the financial position of any person who has,
20
or has had, any connection (whether of a business, family or
21
other nature) with the relevant taxpayer, being a change that
22
has resulted, will result or may reasonably be expected to
23
result, from the scheme;
24
(g) any other consequence for the relevant taxpayer, or for any
25
person referred to in paragraph (f), of the scheme having
26
been entered into or carried out;
27
(h) the nature of any connection (whether of a business, family
28
or other nature) between the relevant taxpayer and any person
29
referred to in paragraph (f).
30
Note:
Section 960-255 of the Income Tax Assessment Act 1997 may be
31
relevant to determining family relationships for the purposes of
32
paragraphs (f) and (h).
33
Tax benefit
34
(3) Despite subsection (1), this Part applies to the scheme only if the
35
relevant taxpayer has obtained, or would but for section 177F
36
obtain, a tax benefit in connection with the scheme.
37
Schedule 1 General anti-avoidance rules
6 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill
2013 No. , 2013
When schemes entered into etc.
1
(4) Despite subsection (1), this Part applies to the scheme only if:
2
(a) the scheme has been or is entered into after 27 May 1981; or
3
(b) the scheme has been or is carried out or commenced to be
4
carried out after that day (and is not a scheme that was
5
entered into on or before that day).
6
Schemes outside Australia
7
(5) This section applies whether or not the scheme has been or is
8
entered into or carried out in Australia or outside Australia or
9
partly in Australia and partly outside Australia.
10
6 Paragraphs 177EA(17)(j) and 177EB(10)(f)
11
Omit "subparagraphs 177D(b)(i) to (viii)", substitute
12
"subsection 177D(2)".
13
7 Subsection 177F(1)
14
Omit "a tax benefit has been obtained, or would but for this section be
15
obtained, by a taxpayer in connection with a scheme to which this Part
16
applies,", substitute "this Part applies to a scheme in connection with
17
which a tax benefit has been obtained, or would but for this section be
18
obtained,".
19
8 Subsection 177F(2A)
20
Omit "section 177CA", substitute "paragraph 177C(1)(bc)".
21
Taxation Administration Act 1953
22
9 Paragraph 18-40(1)(a) in Schedule 1
23
Omit "section 177CA", substitute "paragraph 177C(1)(bc)".
24
10 Application
25
The amendments made by this Schedule apply in relation to all schemes
26
except schemes that were entered into, or that were commenced to be
27
carried out, on or before 15 November 2012.
28
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 7
Schedule 2
--
Modernisation of transfer pricing
1
rules
2
Part 1
--
Main amendments
3
Income Tax Assessment Act 1936
4
1 Division 13 of Part III
5
Repeal the Division.
6
Income Tax Assessment Act 1997
7
2 At the end of Division 815
8
Add:
9
Subdivision 815-B--Arm's length principle for cross-border
10
conditions between entities
11
Guide to Subdivision 815-B
12
815-101 What this Subdivision is about
13
This Subdivision applies if an entity would otherwise get a tax
14
advantage in Australia from cross-border conditions that are
15
inconsistent with the internationally accepted arm's length
16
principle.
17
The entity is treated for income tax and withholding tax purposes
18
as if arm's length conditions had operated.
19
Table of sections
20
Operative provisions
21
815-105 Object
22
815-110 Operation of Subdivision
23
815-115 Substitution of arm's length conditions
24
815-120 When an entity gets a transfer pricing benefit
25
815-125 Meaning of arm's length conditions
26
Schedule 2 Modernisation of transfer pricing rules
Part 1 Main amendments
8 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill
2013 No. , 2013
815-130 Relevance of actual commercial or financial relations
1
815-135 Guidance
2
815-140 Modification for thin capitalisation
3
815-145 Consequential adjustments
4
815-150 Amendment of assessments
5
Operative provisions
6
815-105 Object
7
(1) The object of this Subdivision is to ensure that the amount brought
8
to tax in Australia from cross-border conditions between entities is
9
not less than it would be if those conditions reflected:
10
(a) the arm's length contribution made by Australian operations
11
through functions performed, assets used and risks assumed;
12
and
13
(b) the conditions that might be expected to operate between
14
entities dealing at
*
arm's length.
15
(2) The Subdivision does this by specifying that, where an entity
16
would otherwise get a tax advantage from actual conditions that
17
differ from
*
arm's length conditions, the arm's length conditions
18
are taken to operate for income tax and withholding tax purposes.
19
815-110 Operation of Subdivision
20
(1) Nothing in the provisions of this Act other than this Subdivision
21
limits the operation of this Subdivision.
22
(2) Nothing in this Subdivision limits Division 820 (about thin
23
capitalisation) in its application to reduce, or further reduce,
*
debt
24
deductions of an entity.
25
815-115 Substitution of arm's length conditions
26
(1) For the purposes covered by subsection (2), if an entity gets a
27
*
transfer pricing benefit from conditions that operate between the
28
entity and another entity in connection with their commercial or
29
financial relations:
30
(a) those conditions are taken not to operate; and
31
(b) instead, the
*
arm's length conditions are taken to operate.
32
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 9
Note 1:
The conditions that operate include, but are not limited to, such things
1
as price, gross margin, net profit, and the division of profit between
2
the entities.
3
Note 2:
There are special rules about documentation that affect when an entity
4
has a reasonably arguable position about the application (or
5
non-application) of this Subdivision: see Subdivision 284-E in
6
Schedule 1 to the Taxation Administration Act 1953.
7
(2) The purposes covered by this subsection are:
8
(a) if the
*
transfer pricing benefit arises under
9
subparagraph 815-120(1)(c)(i)--working out the amount (if
10
any) of the entity's taxable income for the income year; and
11
(b) if the transfer pricing benefit arises under
12
subparagraph 815-120(1)(c)(ii)--working out the amount (if
13
any) of the entity's loss of a particular
*
sort for the income
14
year; and
15
(c) if the transfer pricing benefit arises under
16
subparagraph 815-120(1)(c)(iii)--working out the amount (if
17
any) of the entity's
*
tax offsets for the income year; and
18
(d) if the transfer pricing benefit arises under
19
subparagraph 815-120(1)(c)(iv)--working out the amount (if
20
any) of
*
withholding tax payable by the entity in respect of
21
interest or royalties.
22
815-120 When an entity gets a transfer pricing benefit
23
(1) An entity gets a transfer pricing benefit from conditions that
24
operate between the entity and another entity in connection with
25
their commercial or financial relations if:
26
(a) those conditions (the actual conditions) differ from the
27
*
arm's length conditions; and
28
(b) the actual conditions satisfy the cross-border test in
29
subsection (3) for the entity; and
30
(c) had the arm's length conditions operated, instead of the
31
actual conditions, one or more of the following would, apart
32
from this Subdivision, apply:
33
(i) the amount of the entity's taxable income for an income
34
year would be greater;
35
(ii) the amount of the entity's loss of a particular
*
sort for an
36
income year would be less;
37
Schedule 2 Modernisation of transfer pricing rules
Part 1 Main amendments
10 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
(iii) the amount of the entity's
*
tax offsets for an income
1
year would be less;
2
(iv) an amount of
*
withholding tax payable in respect of
3
interest or royalties by the entity would be greater.
4
Absence of condition
5
(2) For the purposes of subsection (1), there is taken to be a difference
6
between the actual conditions and the
*
arm's length conditions if:
7
(a) an actual condition exists that is not one of the arm's length
8
conditions; or
9
(b) a condition does not exist in the actual conditions but is one
10
of the arm's length conditions.
11
Cross-border test
12
(3) Conditions that operate between an entity and another entity in
13
connection with their commercial or financial relations satisfy the
14
cross-border test if:
15
(a) the conditions meet the overseas requirement in the following
16
table for either or both of the entities; or
17
(b) the conditions operate in connection with a
*
business that the
18
entity carries on in an
*
area covered by an international tax
19
sharing treaty.
20
21
Overseas requirement
Item
Column 1
The conditions meet the overseas
requirement for this type of entity:
Column 2
if:
1
any of the following:
(a) an Australian resident;
(b) a resident trust estate for the purposes of
Division 6 of Part III of the Income Tax
Assessment Act 1936;
(c) a partnership in which all of the partners
are, directly or indirectly through one or
more interposed partnerships,
Australian residents or resident trust
estates
the conditions operate at or
through an
*
overseas
permanent establishment of
the entity.
2
an entity not covered by column 1 of item 1 the conditions do not operate
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 11
Overseas requirement
Item
Column 1
The conditions meet the overseas
requirement for this type of entity:
Column 2
if:
solely at or through an
*
Australian permanent
establishment of the entity.
(4) For the purposes of the table in subsection (3), treat any entity that
1
is an Australian resident as not being an Australian resident if:
2
(a) the entity is also a resident in a country that has entered into
3
an
*
international tax agreement with Australia containing a
4
*
residence article; and
5
(b) under that residence article, the entity is taken, for the
6
purposes of the agreement, to be a resident only of that other
7
country.
8
Nil amounts
9
(5) For the purposes of this section and section 815-145:
10
(a) treat an entity that has no taxable income for an income year
11
as having a taxable income for the year of a nil amount; and
12
(b) treat an entity that has no loss of a particular
*
sort for an
13
income year as having a loss of that sort for the year of a nil
14
amount; and
15
(c) treat an entity that has no
*
tax offsets for an income year as
16
having tax offsets for the year of a nil amount.
17
Meaning of residence article
18
(6) A residence article is:
19
(a) Article 4 of the United Kingdom convention (within the
20
meaning of the International Tax Agreements Act 1953); or
21
(b) a corresponding provision of another
*
international tax
22
agreement.
23
815-125 Meaning of arm's length conditions
24
(1) The arm's length conditions, in relation to conditions that operate
25
between an entity and another entity, are the conditions that might
26
Schedule 2 Modernisation of transfer pricing rules
Part 1 Main amendments
12 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
be expected to operate between independent entities dealing wholly
1
independently with one another in comparable circumstances.
2
Most appropriate and reliable method to be used
3
(2) In identifying the
*
arm's length conditions, use the method, or the
4
combination of methods, that is the most appropriate and reliable,
5
having regard to all relevant factors, including the following:
6
(a) the respective strengths and weaknesses of the possible
7
methods in their application to the actual conditions;
8
(b) the circumstances, including the functions performed, assets
9
used and risks borne by the entities;
10
(c) the availability of reliable information required to apply a
11
particular method;
12
(d) the degree of comparability between the actual circumstances
13
and the comparable circumstances, including the reliability of
14
any adjustments to eliminate the effect of material
15
differences between those circumstances.
16
Note:
The possible methods include the methods set out in the documents
17
mentioned in section 815-135 (about relevant guidance material).
18
Comparability of circumstances
19
(3) In identifying comparable circumstances for the purpose of this
20
section, regard must be had to all relevant factors, including the
21
following:
22
(a) the functions performed, assets used and risks borne by the
23
entities;
24
(b) the characteristics of any property or services transferred;
25
(c) the terms of any relevant contracts between the entities;
26
(d) the economic circumstances;
27
(e) the business strategies of the entities.
28
(4) For the purposes of this section, circumstances are comparable to
29
actual circumstances if, to the extent (if any) that the circumstances
30
differ from the actual circumstances:
31
(a) the difference does not materially affect a condition that is
32
relevant to the method; or
33
(b) a reasonably accurate adjustment can be made to eliminate
34
the effect of the difference on a condition that is relevant to
35
the method.
36
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 13
815-130 Relevance of actual commercial or financial relations
1
Basic rule
2
(1) The identification of the
*
arm's length conditions must:
3
(a) be based on the commercial or financial relations in
4
connection with which the actual conditions operate; and
5
(b) have regard to both the form and substance of those relations.
6
Exceptions
7
(2) Despite paragraph (1)(b), disregard the form of the actual
8
commercial or financial relations to the extent (if any) that it is
9
inconsistent with the substance of those relations.
10
(3) Despite subsection (1), if:
11
(a) independent entities dealing wholly independently with one
12
another in comparable circumstances would not have entered
13
into the actual commercial or financial relations; and
14
(b) independent entities dealing wholly independently with one
15
another in comparable circumstances would have entered into
16
other commercial or financial relations; and
17
(c) those other commercial or financial relations differ in
18
substance from the actual commercial or financial relations;
19
the identification of the
*
arm's length conditions must be based on
20
those other commercial or financial relations.
21
(4) Despite subsection (1), if independent entities dealing wholly
22
independently with one another in comparable circumstances
23
would not have entered into commercial or financial relations, the
24
identification of the
*
arm's length conditions is to be based on that
25
absence of commercial or financial relations.
26
(5) Subsections 815-125(3) and (4) (about comparability of
27
circumstances) apply for the purposes of this section.
28
815-135 Guidance
29
(1) For the purpose of determining the effect this Subdivision has in
30
relation to an entity, identify
*
arm's length conditions so as best to
31
achieve consistency with the documents covered by this section.
32
Schedule 2 Modernisation of transfer pricing rules
Part 1 Main amendments
14 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
(2) The documents covered by this section are as follows:
1
(a) the Transfer Pricing Guidelines for Multinational Enterprises
2
and Tax Administrations, as approved by the Council of the
3
Organisation for Economic Cooperation and Development
4
and last amended on 22 July 2010;
5
(b) a document, or part of a document, prescribed by the
6
regulations for the purposes of this paragraph.
7
(3) However, the document mentioned in paragraph (2)(a) is not
8
covered by this section if the regulations so prescribe.
9
(4) Regulations made for the purposes of paragraph (2)(b) or
10
subsection (3) may prescribe different documents or parts of
11
documents for different circumstances.
12
815-140 Modification for thin capitalisation
13
(1) This section modifies the way an entity to which section 815-115
14
applies works out its taxable income, or its loss of a particular
15
*
sort, for an income year, if:
16
(a) Division 820 (about thin capitalisation) applies to the entity
17
for the income year; and
18
(b) the
*
arm's length conditions affect costs that are
*
debt
19
deductions of the entity for the income year.
20
(2) If working out what those costs would be if the
*
arm's length
21
conditions had operated involves applying a rate to a
*
debt interest:
22
(a) work out the rate as if the arm's length conditions had
23
operated; but
24
(b) apply the rate to the debt interest the entity actually issued.
25
Note:
Division 820 may apply to reduce or further reduce debt deductions.
26
815-145 Consequential adjustments
27
(1) The Commissioner may make a determination under subsection (2)
28
in relation to an entity (the disadvantaged entity) if:
29
(a)
*
arm's length conditions are taken by section 815-115 to
30
operate; and
31
(b) the Commissioner considers that, if the arm's length
32
conditions, instead of the actual conditions, had operated:
33
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 15
(i) the amount of the disadvantaged entity's taxable income
1
for an income year might have been expected to be less
2
than its actual amount; or
3
(ii) the amount of the disadvantaged entity's loss of a
4
particular
*
sort for an income year might have been
5
expected to be greater than its actual amount; or
6
(iii) the amount of the disadvantaged entity's
*
tax offsets for
7
an income year might have been expected to be greater
8
than their actual amount; or
9
(iv) an amount of
*
withholding tax payable in respect of
10
interest or royalties by the disadvantaged entity might
11
have been expected to be less than its actual amount;
12
and
13
(c) the Commissioner considers that it is fair and reasonable that
14
the actual amount mentioned in subparagraph (b)(i), (ii), (iii)
15
or (iv) (as the case requires) be adjusted accordingly.
16
(2) For the purpose of adjusting an amount as mentioned in
17
paragraph (1)(c), the Commissioner may make a determination
18
stating the amount that is (and has been at all times) the amount of
19
the disadvantaged entity's:
20
(a) taxable income for the income year; or
21
(b) loss of a particular
*
sort for the income year; or
22
(c)
*
tax offsets, or tax offset of a particular kind, for the income
23
year; or
24
(d)
*
withholding tax payable in respect of interest or royalties.
25
(3) The Commissioner may take such action as the Commissioner
26
considers necessary to give effect to a determination under this
27
section.
28
(4) The Commissioner must give a copy of a determination under this
29
section to the disadvantaged entity.
30
(5) A failure to comply with subsection (4) does not affect the validity
31
of the determination.
32
(6) To avoid doubt, the Commissioner may include all or any
33
determinations under this section in relation to a particular entity,
34
including determinations of different kinds, in the same document.
35
Schedule 2 Modernisation of transfer pricing rules
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(7) An entity may give the Commissioner a written request to make a
1
determination under this section relating to the entity. The
2
Commissioner must decide whether or not to grant the request, and
3
give the entity notice of the Commissioner's decision.
4
(8) If the entity is dissatisfied with the Commissioner's decision, the
5
entity may object, in the manner set out in Part IVC of the Taxation
6
Administration Act 1953, against that decision.
7
815-150 Amendment of assessments
8
(1) Section 170 of the Income Tax Assessment Act 1936 does not
9
prevent the amendment of an assessment of an entity for an income
10
year if:
11
(a) the amendment is made within 7 years after the day on which
12
the Commissioner gives notice of the assessment to the
13
entity; and
14
(b) the amendment is made for the purpose of giving effect to
15
section 815-115.
16
(2) Section 170 of the Income Tax Assessment Act 1936 does not
17
prevent the amendment of an assessment at any time for the
18
purpose of giving effect to section 815-145.
19
Subdivision 815-C--Arm's length principle for permanent
20
establishments
21
Guide to Subdivision 815-C
22
815-201 What this Subdivision is about
23
This Subdivision applies the internationally accepted arm's length
24
principle in the context of permanent establishments (PEs).
25
Table of sections
26
Operative provisions
27
815-205 Object
28
815-210 Operation of Subdivision
29
815-215 Substitution of arm's length profits
30
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815-220 When an entity gets a transfer pricing benefit
1
815-225 Meaning of arm's length profits
2
815-230 Source rules for certain arm's length profits
3
815-235 Guidance
4
815-240 Amendment of assessments
5
Operative provisions
6
815-205 Object
7
The object of this Subdivision is to ensure that the amount brought
8
to tax in Australia by entities operating
*
permanent establishments
9
is not less than it would be if the permanent establishment were a
10
distinct and separate entity engaged in the same or comparable
11
activities under the same or comparable circumstances, but dealing
12
wholly independently with the other part of the entity.
13
815-210 Operation of Subdivision
14
(1) Nothing in the provisions of this Act other than this Subdivision
15
limits the operation of this Subdivision.
16
(2) Nothing in this Subdivision limits Division 820 (about thin
17
capitalisation) in its application to reduce, or further reduce,
*
debt
18
deductions of an entity.
19
(3) For the purposes of this Subdivision, a branch to which
20
subsection 160ZZW(2) of the Income Tax Assessment Act 1936
21
(about certain Australian branches of foreign banks) applies is
22
taken not to be, and not to have been at any time since its
23
establishment, a
*
permanent establishment in Australia of the bank.
24
815-215 Substitution of arm's length profits
25
(1) For the purposes covered by subsection (2), if an entity gets a
26
*
transfer pricing benefit from the attribution of profits to a
*
PE of
27
the entity:
28
(a) the amount of profits actually attributed to the PE is taken not
29
to have been so attributed; and
30
(b) instead, the
*
arm's length profits are taken to have been
31
attributed to the PE.
32
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Note:
There are special rules about documentation that affect when an entity
1
has a reasonably arguable position about the application (or
2
non-application) of this Subdivision: see Subdivision 284-E in
3
Schedule 1 to the Taxation Administration Act 1953.
4
(2) The purposes covered by this subsection are:
5
(a) if the
*
transfer pricing benefit arises under
6
subparagraph 815-220(1)(b)(i)--working out the amount (if
7
any) of the entity's taxable income for the income year; and
8
(b) if the transfer pricing benefit arises under
9
subparagraph 815-220(1)(b)(ii)--working out the amount (if
10
any) of a loss of a particular
*
sort for the income year; and
11
(c) if the transfer pricing benefit arises under
12
subparagraph 815-220(1)(b)(iii)--working out the amount (if
13
any) of the entity's
*
tax offsets for the income year.
14
815-220 When an entity gets a transfer pricing benefit
15
(1) An entity gets a transfer pricing benefit from the attribution of
16
profits to a
*
PE of the entity if:
17
(a) the amount of profits (the actual profits) attributed to the PE
18
differs from the
*
arm's length profits for the PE; and
19
(b) had the arm's length profits, instead of the actual profits,
20
been attributed to the PE, one or more of the following
21
would, apart from this Subdivision, apply:
22
(i) the amount of the entity's taxable income for an income
23
year would be greater;
24
(ii) the amount of the entity's loss of a particular
*
sort for an
25
income year would be less;
26
(iii) the amount of the entity's
*
tax offsets for an income
27
year would be less.
28
Nil amounts
29
(2) For the purposes of this section:
30
(a) treat an entity that has no taxable income for an income year
31
as having a taxable income for the year of a nil amount; and
32
(b) treat an entity that has no loss of a particular
*
sort for an
33
income year as having a loss of that sort for the year of a nil
34
amount; and
35
Modernisation of transfer pricing rules Schedule 2
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(c) treat an entity that has no
*
tax offsets for an income year as
1
having tax offsets for the year of a nil amount.
2
815-225 Meaning of arm's length profits
3
(1) The arm's length profits for a
*
PE of an entity are worked out by
4
allocating the actual expenditure and income of the entity between
5
the PE and the entity so that the profits attributed to the PE equal
6
the profits the PE might be expected to make if:
7
(a) the PE were a distinct and separate entity; and
8
(b) the activities and circumstances of the PE, including the
9
functions performed, assets used and risks borne by the PE,
10
were those of that separate entity; and
11
(c) the conditions that operated between that separate entity and
12
the entity of which it is a PE were the
*
arm's length
13
conditions.
14
(2) The conditions to which the
*
arm's length conditions mentioned in
15
paragraph (1)(c) relate are the conditions that would operate
16
between the separate entity and the entity of which it is a
*
PE if the
17
assumptions in paragraphs (1)(a) and (b) were made.
18
(3) For the purposes of subsection (1):
19
(a) the actual expenditure of an entity is taken to include losses
20
and outgoings; and
21
(b) the actual income of an entity is taken to include any amount
22
that is, or is to be, included in the entity's assessable income.
23
815-230 Source rules for certain arm's length profits
24
(1) The
*
arm's length profits for a
*
PE in Australia are taken, for the
25
purposes of this Act, to be attributable to sources in Australia.
26
(2) The
*
arm's length profits for a
*
PE in an
*
area covered by an
27
international tax sharing treaty are taken, for the purposes of this
28
Act, to be attributable to sources in that area.
29
815-235 Guidance
30
(1) For the purpose of determining the effect this Subdivision has in
31
relation to an entity, work out
*
arm's length profits, and identify
32
*
arm's length conditions, so as best to achieve consistency with:
33
Schedule 2 Modernisation of transfer pricing rules
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20 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
(a) the documents covered by this section; and
1
(b) subject to paragraph (a), the documents covered by
2
section 815-135.
3
(2) The documents covered by this section are as follows:
4
(a) the Model Tax Convention on Income and on Capital, and its
5
Commentaries, as adopted by the Council of the Organisation
6
for Economic Cooperation and Development and last
7
amended on 22 July 2010, to the extent that document
8
extracts the text of Article 7 and its Commentary as they read
9
before 22 July 2010;
10
(b) a document, or part of a document, prescribed by the
11
regulations for the purposes of this paragraph.
12
(3) However, the document mentioned in paragraph (2)(a) is not
13
covered by this section if the regulations so prescribe.
14
(4) A document covered by section 815-135 is to be disregarded for
15
the purposes of this section if the regulations so prescribe.
16
(5) Regulations made for the purposes of paragraph (2)(b),
17
subsection (3) or subsection (4) may prescribe different documents
18
or parts of documents for different circumstances.
19
815-240 Amendment of assessments
20
Section 170 of the Income Tax Assessment Act 1936 does not
21
prevent the amendment of an assessment of an entity for an income
22
year if:
23
(a) the amendment is made within 7 years after the day on which
24
the Commissioner gives notice of the assessment to the
25
entity; and
26
(b) the amendment is made for the purpose of giving effect to
27
section 815-215.
28
Modernisation of transfer pricing rules Schedule 2
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No. , 2013 21
Subdivision 815-D--Special rules for trusts and partnerships
1
Guide to Subdivision 815-D
2
815-301 What this Subdivision is about
3
This Subdivision provides special rules about the way
4
Subdivisions 815-B and 815-C apply to trusts and partnerships.
5
Table of sections
6
Operative provisions
7
815-305 Special rule for trusts
8
815-310 Special rules for partnerships
9
Operative provisions
10
815-305 Special rule for trusts
11
Subdivisions 815-B and 815-C apply in relation to the
*
net income
12
of a trust in the same way those Subdivisions apply in relation to
13
the taxable income of an entity other than a trust.
14
815-310 Special rules for partnerships
15
(1) Subdivisions 815-B and 815-C apply in relation to the
*
net income
16
of a partnership in the same way those Subdivisions apply in
17
relation to the taxable income of an entity other than a partnership.
18
(2) Subdivisions 815-B and 815-C apply in relation to a
*
partnership
19
loss of a partnership in the same way those Subdivisions apply in
20
relation to a
*
tax loss of an entity other than a partnership.
21
Taxation Administration Act 1953
22
3 After subsection 284-145(2A) in Schedule 1
23
Insert:
24
(2B) You are also liable to an administrative penalty if:
25
Schedule 2 Modernisation of transfer pricing rules
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Bill 2013 No. , 2013
(a) to give effect to Subdivision 815-B or 815-C of the Income
1
Tax Assessment Act 1997 (also the adjustment provision) in
2
relation to a
*
scheme, the Commissioner:
3
(i) amends your assessment for an income year; or
4
(ii) serves you with one or more notices under
5
subsection 128C(7) of the Income Tax Assessment Act
6
1936 in respect of income that is taken because of the
7
application of the adjustment provision to have been
8
derived in the income year; and
9
(b) as a result, you are liable to pay an additional amount of
10
income tax or
*
withholding tax (as the case requires).
11
Note:
Subdivisions 815-B and 815-C of the Income Tax Assessment Act
12
1997 apply the arm's length principle (about transfer pricing) to
13
entities and permanent establishments respectively.
14
4 At the end of section 284-150 in Schedule 1
15
Add:
16
Scheme shortfall amount for cross-border transfer pricing
17
(4) Despite subsection (2), your scheme shortfall amount for a
18
*
scheme to which subsection 284-145(2B) applies is the total
19
amount of additional income tax and
*
withholding tax you are
20
liable to pay as mentioned in that subsection.
21
(5) Disregard your
*
scheme shortfall amount for a
*
scheme to which
22
subsection 284-145(1) applies to the extent that scheme shortfall
23
amount is attributable to additional tax that is, or is part of, your
24
scheme shortfall amount for a scheme to which
25
subsection 284-145(2B) applies.
26
5 Section 284-160 in Schedule 1
27
Repeal the section, substitute:
28
284-160 Base penalty amount: schemes
29
(1) The base penalty amount for a
*
scheme to which
30
subsection 284-145(1) applies is, subject to section 284-224:
31
(a) 50% of your
*
scheme shortfall amount; or
32
(b) 25% of your scheme shortfall amount if it is
*
reasonably
33
arguable that the adjustment provision does not apply.
34
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 23
(2) The base penalty amount for a
*
scheme to which
1
subsection 284-145(2A) applies is, subject to section 284-224:
2
(a) 25% of your
*
scheme shortfall amount; or
3
(b) 10% of your scheme shortfall amount if it is
*
reasonably
4
arguable that the adjustment provision does not apply.
5
(3) The base penalty amount for a
*
scheme to which
6
subsection 284-145(2B) applies is worked out using this table and
7
section 284-224 if relevant:
8
9
Base penalty amount
Item
Column 1
In this situation:
Column 2
The base penalty amount is:
1
having regard to any
relevant matters, it is
reasonable to conclude that
an entity that (alone or
with others) entered into or
carried out the
*
scheme, or
part of it, did so with the
sole or dominant purpose
of that entity or another
entity getting a
*
transfer
pricing benefit from the
scheme
the sum of:
(a) 50% of your
*
scheme shortfall amount, to
the extent that it is not attributable as
mentioned in paragraph (b); and
(b) 25% of your scheme shortfall amount, to
the extent (if any) that it is attributable to
the entity, or the entity's agent, treating the
adjustment provision as applying
(including not applying) to a matter (or
identical matters) in a particular way that is
*
reasonably arguable
2
item 1 does not apply
the sum of:
(a) 25% of your
*
scheme shortfall amount, to
the extent that it is not attributable as
mentioned in paragraph (b); and
(b) 10% of your scheme shortfall amount, to
the extent (if any) that it is attributable to
the entity, or the entity's agent, treating the
adjustment provision as applying
(including not applying) to a matter (or
identical matters) in a particular way that is
*
reasonably arguable
Note:
For special rules about when transfer pricing treatment is not
10
reasonably arguable, see Subdivision 284-E.
11
6 At the end of Subdivision 284-C in Schedule 1
12
Schedule 2 Modernisation of transfer pricing rules
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24 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
Add:
1
284-165 Exception--threshold for penalty arising from cross-border
2
transfer pricing
3
(1) You are not liable to an administrative penalty under
4
subsection 284-145(2B) if your
*
scheme shortfall amount is equal
5
to or less than your
*
reasonably arguable threshold.
6
(2) You are also not liable to an administrative penalty under that
7
subsection if:
8
(a) you have the
*
scheme shortfall amount because of
9
section 284-30 (about trusts); and
10
(b) the amount by which the trust would, apart from the
11
application of Subdivision 815-B or 815-C of the Income Tax
12
Assessment Act 1997, have had a greater
*
net income, or a
13
lesser
*
tax loss, is equal to or less than the trust's
*
reasonably
14
arguable threshold.
15
(3) You are also not liable to an administrative penalty under that
16
subsection if:
17
(a) you have the
*
scheme shortfall amount because you are a
18
partner in a partnership that participated in the
*
scheme; and
19
(b) the amount by which the partnership would, apart from the
20
application of Subdivision 815-B or 815-C of that Act, have
21
had a greater
*
net income, or a lesser
*
partnership loss, is
22
equal to or less than the partnership's
*
reasonably arguable
23
threshold.
24
Nil amounts
25
(4) For the purposes of this section:
26
(a) treat a trust or a partnership that has no
*
net income for an
27
income year as having a net income for the year of a nil
28
amount; and
29
(b) treat a trust that has no
*
tax loss for an income year as having
30
a tax loss for the year of a nil amount; and
31
(c) treat a partnership that has no
*
partnership loss for an income
32
year as having a partnership loss for the year of a nil amount.
33
7 At the end of Division 284 in Schedule 1
34
Modernisation of transfer pricing rules Schedule 2
Main amendments Part 1
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 25
Add:
1
Subdivision 284-E--Special rules about unarguable positions
2
for cross-border transfer pricing
3
Table of sections
4
284-250 Undocumented transfer pricing treatment not reasonably arguable
5
284-255 Documentation requirements
6
284-250 Undocumented transfer pricing treatment not reasonably
7
arguable
8
This Division has effect in relation to an entity as if a matter was
9
not
*
reasonably arguable if:
10
(a) the matter is a particular way of applying (including not
11
applying) Subdivision 815-B or 815-C of the Income Tax
12
Assessment Act 1997 to a matter (or identical matters); and
13
(b) the entity does not have records that meet the requirements in
14
this Subdivision for the application of the Subdivision
15
mentioned in paragraph (a) to that matter (or those matters)
16
in that way.
17
Note:
For the Commissioner's power to remit an administrative penalty
18
imposed by this Part, see section 298-20.
19
284-255 Documentation requirements
20
(1) Records kept by an entity meet the requirements in this
21
Subdivision for the application (or non-application) of
22
Subdivision 815-B or 815-C of the Income Tax Assessment Act
23
1997 to a matter (or identical matters) in a particular way if the
24
records:
25
(a) are prepared before the time by which the entity lodges its
26
*
income tax return for the income year relevant to the matter
27
(or matters); and
28
(b) are in English, or readily accessible and convertible into
29
English; and
30
(c) explain the particular way in which the Subdivision applies
31
(or does not apply) to the matter (or matters); and
32
(d) explain why the application of the Subdivision to the matter
33
(or matters) in that way best achieves the consistency
34
Schedule 2 Modernisation of transfer pricing rules
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26 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
mentioned in section 815-135 or 815-235 of that Act (as the
1
case requires) (about guidance material).
2
(2) Without limiting subsection (1), the records must allow each of the
3
following to be readily ascertained:
4
(a) the
*
arm's length conditions relevant to the matter (or
5
matters);
6
(b) the particulars of the method used and comparable
7
circumstances relevant to identifying those arm's length
8
conditions;
9
(c) unless the records are for the non-application of the
10
Subdivision to a matter (or matters)--the result that the
11
application of the Subdivision in that particular way, as
12
compared to the non-application of the Subdivision, has for
13
the operation of this Act in relation to the entity;
14
(d) for Subdivision 815-B--the actual conditions relevant to the
15
matter (or matters);
16
(e) for Subdivision 815-C:
17
(i) the actual profits mentioned in paragraph 815-220(1)(a)
18
of that Act and the
*
arm's length profits, to the extent
19
that they are relevant to the matter (or matters); and
20
(ii) the particulars of the activities and circumstances
21
mentioned in subsection 815-225(1) of that Act, to the
22
extent they are relevant to the matter (or matters).
23
Modernisation of transfer pricing rules Schedule 2
Other amendments Part 2
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 27
Part 2
--
Other amendments
1
Income Tax Assessment Act 1936
2
8 Subsection 6(1) (definition of international tax sharing
3
treaty)
4
Repeal the definition.
5
9 Section 102AAZA
6
Repeal the section.
7
10 At the end of subsection 160ZZW(2)
8
Add:
9
Note:
For cross-border transfer pricing, the rules in Subdivision 815-B of the
10
Income Tax Assessment Act 1997 apply to the separate legal entity,
11
rather than the rules for permanent establishments in
12
Subdivision 815-C: see subsection 815-210(3) of that Act.
13
11 Subsection 160ZZW(5)
14
Repeal the subsection.
15
12 Subsections 170(9B) and (9C)
16
Repeal the subsections.
17
13 Subsection 170(10) (table item 24)
18
Repeal the item.
19
14 Subsection 170(14) (definition of double taxation
20
agreement)
21
Repeal the definition.
22
15 Subsection 170(14) (definition of prescribed provision)
23
Repeal the definition.
24
16 Subsection 170(14) (definition of relevant provision)
25
Repeal the definition.
26
17 Paragraph 389(a)
27
Schedule 2 Modernisation of transfer pricing rules
Part 2 Other amendments
28 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
Omit "subsection 136AF(1A),".
1
18 Section 400
2
Repeal the section, substitute:
3
400 Modified cross-border requirement for transfer pricing
4
(1) This section applies in calculating the attributable income of the
5
eligible CFC.
6
(2) Conditions that operate between the eligible CFC and another
7
entity do not satisfy the cross-border test in subsection 815-120(3)
8
of the Income Tax Assessment Act 1997 if:
9
(a) the other entity is a CFC; and
10
(b) the eligible CFC and the other entity are residents of the same
11
listed country (disregarding section 383 of this Act).
12
19 Subsection 434(3)
13
Repeal the subsection, substitute:
14
(3) If:
15
(a) arm's length conditions are taken by Subdivision 815-B of
16
the Income Tax Assessment Act 1997 to operate for purposes
17
relating to the company; and
18
(b) had those conditions operated, an amount described in any of
19
the paragraphs of subsection (1) as being an amount shown in
20
the recognised accounts of the company for the statutory
21
account period would have been different;
22
then the different amount is substituted for the amount shown in
23
the recognised accounts.
24
Income Tax Assessment Act 1997
25
20 Section 10-
5 (table item headed "avoidance of tax")
26
Omit:
27
profits shifted out of Australia ........................................... 136AD, 136AE
21 Section 10-
5 (after table item headed "trading stock")
28
Insert:
29
Modernisation of transfer pricing rules Schedule 2
Other amendments Part 2
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 29
transfer pricing
arm's length principle for cross-border conditions
between entities ............................................................
Subdivision 815-B
arm's length principle for permanent establishments ......... Subdivision 815-C
22 Section 12-5 (t
able item headed "tax avoidance schemes")
1
Omit:
2
international profit shifting, transfer pricing ...................... 136AA to 136AF
23 Section 12-
5 (table item headed "transfer pricing")
3
Repeal the item, substitute:
4
transfer pricing
arm's length principle for cross-border conditions
between entities ............................................................
Subdivision 815-B
arm's length principle for permanent establishments ......... Subdivision 815-C
24 Section 70-20 (note 1)
5
Omit "Note 1", substitute "Note".
6
25 Section 70-20 (note 2)
7
Repeal the note.
8
26 Section 355-400 (note 1)
9
Omit "Note 1", substitute "Note".
10
27 Section 355-400 (note 2)
11
Repeal the note.
12
28 Section 420-20 (note)
13
Repeal the note.
14
29 Section 420-30 (note)
15
Repeal the note.
16
30 Paragraph 802-35(1)(c)
17
Omit "international tax sharing treaty (as defined in
18
subsection 136AA(1) of the Income Tax Assessment Act 1936)",
19
substitute "
*
international tax sharing treaty".
20
Schedule 2 Modernisation of transfer pricing rules
Part 2 Other amendments
30 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
31 Paragraph 802-35(2)(c)
1
Omit "international tax sharing treaty (as defined in
2
subsection 136AA(1) of the Income Tax Assessment Act 1936)",
3
substitute "
*
international tax sharing treaty".
4
32 At the end of section 815-10
5
Add:
6
Note:
This Subdivision does not apply to income years to which
7
Subdivisions 815-B and 815-C apply: see section 815-1 of the Income
8
Tax (Transitional Provisions) Act 1997.
9
33 Subsection 815-40(2)
10
Before "section 136AB", insert "former".
11
34 Section 820-30 (note)
12
Omit "Subdivision 815-A", substitute "Division 815".
13
35 Subparagraph 842-250(1)(c)(ii)
14
Repeal the subparagraph, substitute:
15
(ii) in respect of a fund that is resident in a country that has
16
not entered into an international tax agreement with
17
Australia containing a business profits article--amounts
18
included in the assessable income of the fund are treated
19
as having a source in Australia because of
20
subsection 815-230(1); or
21
36 Subsection 995-1(1)
22
Insert:
23
area covered by an international tax sharing treaty: if, under an
24
*
international tax sharing treaty, Australia and another country
25
share tax revenues from activities undertaken in an area identified
26
by or under the treaty, that area is an area covered by an
27
international tax sharing treaty.
28
37 Subsection 995-1(1)
29
Insert:
30
arm's length conditions has the meaning given by
31
section 815-125.
32
Modernisation of transfer pricing rules Schedule 2
Other amendments Part 2
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 31
38 Subsection 995-1(1)
1
Insert:
2
arm's length profits has the meaning given by section 815-225.
3
39 Subsection 995-1(1)
4
Insert:
5
international tax sharing treaty:
6
(a) means an agreement between Australia and another country
7
under which Australia and the other country share tax
8
revenues from activities undertaken in an area identified by
9
or under the agreement; and
10
(b) does not include an agreement within the meaning of the
11
International Tax Agreements Act 1953.
12
40 Subsection 995-1(1)
13
Insert:
14
PE: see permanent establishment.
15
41 Subsection 995-1(1)
16
Insert:
17
reasonably arguable threshold for an income year has the
18
meaning given by subsection 284-90(3) in Schedule 1 to the
19
Taxation Administration Act 1953.
20
42 Subsection 995-1(1)
21
Insert:
22
residence article has the meaning given by subsection 815-120(6).
23
43 Subsection 995-1(1) (definition of transfer pricing benefit)
24
Repeal the definition, substitute:
25
transfer pricing benefit has the meaning given by sections 815-15,
26
815-120 and 815-220.
27
Schedule 2 Modernisation of transfer pricing rules
Part 2 Other amendments
32 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
Taxation Administration Act 1953
1
44 At the end of subsection 284-15(1) in Schedule 1
2
Add:
3
Note:
For the effect of transfer pricing documentation on when a matter is
4
reasonably arguable, see Subdivision 284-E.
5
45 Subsection 284-90(1) in Schedule 1 (table item 4, column
6
headed "In this situation:")
7
Omit "the greater of $10,000 or 1% of the income tax payable, or
8
*
MRRT payable, by you for the income year, worked out on the basis of
9
your
*
income tax return or
*
MRRT return", substitute "your
*
reasonably
10
arguable threshold".
11
46 Subsection 284-90(1) in Schedule 1 (table item 5, column
12
headed "In this situation:")
13
Omit "the greater of $20,000 or 2% of the trust's net income (if any) for
14
that year worked out on the basis of the trust's
*
income tax return",
15
substitute "the trust's
*
reasonably arguable threshold".
16
47 Subsection 284-90(1) in Schedule 1 (table item 6, column
17
headed "In this situation:")
18
Omit "the greater of $20,000 or 2% of the partnership net income (if
19
any) for that year, worked out on the basis of the partnership's
*
income
20
tax return", substitute "the partnership's
*
reasonably arguable
21
threshold".
22
48 At the end of section 284-90 in Schedule 1
23
Add:
24
(3) An entity's reasonably arguable threshold for an income year is:
25
(a) unless paragraph (b) applies--the greater of the following
26
amounts:
27
(i) $10,000;
28
(ii) 1% of the income tax payable, or
*
MRRT payable (as
29
the case requires), by the entity for the income year,
30
worked out on the basis of the entity's
*
income tax
31
return or
*
MRRT return (as the case requires); or
32
Modernisation of transfer pricing rules Schedule 2
Other amendments Part 2
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 33
(b) if the entity is a trust or partnership--the greater of the
1
following amounts:
2
(i) $20,000;
3
(ii) 2% of the entity's
*
net income (if any) for the income
4
year worked out on the basis of the entity's
*
income tax
5
return.
6
49 Subsection 284-145(2) in Schedule 1
7
Repeal the subsection.
8
Schedule 2 Modernisation of transfer pricing rules
Part 3 Application
34 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
Part 3
--
Application
1
50 Application
2
The amendments made by Parts 1 and 2 of this Schedule (except item 2)
3
apply:
4
(a) in respect of tax other than withholding tax--in relation to
5
income years starting on or after the date mentioned in
6
subsection 815-15(2) of the Income Tax (Transitional
7
Provisions) Act 1997, as inserted by this Part; and
8
(b) in respect of withholding tax--in relation to income derived,
9
or taken to be derived, in income years starting on or after
10
that date.
11
Note:
For the application of Subdivisions 815-B, 815-C and 815-D of the Income Tax
12
Assessment Act 1997, as inserted by item 2, see Division 815 of the Income Tax
13
(Transitional Provisions) Act 1997.
14
Income Tax (Transitional Provisions) Act 1997
15
51 Subdivision 815-A (heading)
16
Repeal the heading, substitute:
17
Subdivision 815-A--Cross-border transfer pricing
18
52 Section 815-1
19
Before "Subdivision 815-A", insert "(1)".
20
53 At the end of section 815-1
21
Add:
22
(2) However, Subdivision 815-A does not apply to an income year to
23
which Subdivisions 815-B and 815-C of that Act apply.
24
Note:
For the income years to which Subdivisions 815-B and 815-C apply,
25
see section 815-15 of this Act.
26
54 At the end of Subdivision 815-A
27
Add:
28
Modernisation of transfer pricing rules Schedule 2
Application Part 3
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
No. , 2013 35
815-15 Application of Subdivisions 815-B, 815-C and 815-D of the
1
Income Tax Assessment Act 1997
2
(1) Subdivisions 815-B, 815-C and 815-D of the Income Tax
3
Assessment Act 1997 apply:
4
(a) in respect of tax other than withholding tax--in relation to
5
income years starting on or after the date mentioned in
6
subsection (2); and
7
(b) in respect of withholding tax--in relation to income derived,
8
or taken to be derived, in income years starting on or after
9
that date.
10
Start date for transfer pricing amendments
11
(2) The date is the earlier of:
12
(a) 1 July 2013; and
13
(b) the day the Tax Laws Amendment (Countering Tax
14
Avoidance and Multinational Profit Shifting) Act 2013
15
receives the Royal Assent.
16
Schedule 2 Modernisation of transfer pricing rules
Part 4 Minor amendments relating to treaty-equivalent transfer pricing rules
36 Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting)
Bill 2013 No. , 2013
Part 4
--
Minor amendments relating to
1
treaty-equivalent transfer pricing rules
2
Income Tax Assessment Act 1997
3
55 Subparagraph 815-35(1)(b)(ii)
4
Omit "tax loss", substitute "
*
tax loss".
5
56 Subparagraph 815-35(2)(b)(ii)
6
Omit "tax loss", substitute "
*
tax loss".
7
57 Subsection 815-35(10)
8
Omit "an entity", substitute "the entity".
9
Taxation Administration Act 1953
10
58 Paragraph 284-160(b) in Schedule 1
11
After "subsection 284-145(2)", insert "or (2A)".
12
59 Application
13
The amendment made by item 58 applies to income years starting on or
14
after 1 July 2012.
15