Simplified Transfer Pricing – Has it really Arrived?

Tim Grey

Simplified Transfer Pricing – Has it really Arrived?


The ATO has released details of the criteria regarding the eligibility of taxpayers to elect for the Simplifying Transfer Pricing documentation.   The simplified options (and the compliance assurance) will be starting from 29 June 2013 for an initial period of 3 years.


During this period, if an entity has elected to use the simplified options, the ATO will not review the records that relate to the relevant cross-border conditions between entities (CBCBE), however they will confirm the entity’s eligibility.


The simplified record-keeping options are available to specific entity types and limited transactions only, so not all businesses will be able to benefit.  The common criteria for entities to be eligible is that they must not have derived sustained losses or have related party transactions with entities in specified countries.


The following details criteria for a taxpayer to be eligible for the simplified documentation:

TP Table 2


As noted above certain types of transactions may also benefit from the low documentation requirements.  These are mainly intra group services (extending the existing concession) and low level loans.  These types of transactions only benefit from the low documentation concession if they meet certain requirements such as mark up percentages and maximum loan balances.


Whilst the above provides certain taxpayers a reduced compliance burden, it should be noted that it does not provide this for all types of taxpayers.  Due to the limited circumstances in which these benefits apply, a judgment call must be made for each individual case.


Should you have any questions on the above please contact your relevant ESV engagement partner on 9283 1666.


Article by David Prichard