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Could an Australian APA be enforced in a court?

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Published on 01 Apr 14 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

An advance pricing arrangement (APA) is generally an arrangement between a taxpayer, the Australian Taxation Office (ATO) and sometimes also a foreign tax authority regarding the income tax treatment of international transactions, agreements or arrangements between related parties or associates. Advance pricing arrangements often represent a compromise between the taxpayer and the ATO where a dispute is resolved by execution of an APA in relation to future years (sometimes bilaterally). Since an APA is a compromise and deals with future years, the outcome may differ from that which would result under arm’s length conditions.

Taxpayers who wish to enforce such agreements against the ATO will find it difficult to do so through court processes. Disputes over APAs are currently resolved by administrative means, importantly including mutual agreement procedure. This article considers whether taxpayers or the Commissioner of Taxation might also be able to bring such disputes before a court.

Author profile

Paul McNab CTA
Photo of author, Paul MCNAB Paul McNab, CTA, is the Principal of McNab Tax Lawyers and has more than 30 years of taxation experience. Prior to starting McNab Tax Lawyers, Paul was a tax partner and DLA Piper and was a leading partner in the Tax Controversy group of a ‘Big 4’ accounting firm where he also led the Australian firm Technology, Media and Telecommunications (TMT) sector practice for 4 years. In recent years he has provided extensive advice to multinationals changing their business structures in response to the commercial forces of globalisation and the BEPS initiatives prompted by the OECD. Paul has consulted to multinationals across a range of sectors and transactions and has litigated taxation matters in the state and federal courts, including the High Court of Australia. - Current at 28 May 2024
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