Australia – Considerations of ATO’s policy on transfer pricing reconstruction

November 13: Taxation Ruling (TR) 2014/6—issued yesterday by the Australian Taxation Office (ATO)—sets forth the Commissioner’s view on the application of the reconstruction provisions as contained in Australia’s new transfer pricing rules.

The significance of these reconstruction provisions is that they authorise the Commissioner to re-price, reconstruct or disregard a cross-border transaction, if it were not considered to be at arm’s length (either by reference to comparable third-party evidence or hypothesising as to what independent third parties would do in comparable circumstances).

Read a November 2014 report prepared by the KPMG member firm in Australia: Transfer Pricing: ATO’s views on reconstruction provisions

This KPMG Transfer Pricing Update revisits the new law’s provisions, highlighting major concerns and key developments, providing KPMG observations, and including a discussion of action steps that taxpayers possibly may take to address these issues.