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Reconstruction under the new transfer pricing law
Published on 01 Mar 14 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
One of the few areas of income tax law in which taxpayers may be subjected to taxation on the basis of a hypothetical alternative to the actual transaction undertaken is the new profit-shifting regime contained in Subdiv 815-B of the Income Tax Assessment Act 1997 (Cth). Determining arm’s length prices can be challenging enough, particularly for complex or unusual transactions, but when the related party transaction itself is open to reconstruction, the task can be even more difficult.
This article describes some of the nuances and potential ambiguity associated with the new Subdiv 815-B in the context of the requirement to reconstruct transactions. The authors provide an overview of Subdiv 815-B and contrast these provisions with the former transfer pricing law (contained in Div 13 of the Income Tax Assessment Act 1936 (Cth)), before undertaking a closer examination of the reconstruction provisions contained in the new laws.
Author profiles
Nick Houseman
Nick Houseman FTIA is a Partner in Transfer Pricing at PricewaterhouseCoopers, Sydney. Nick has over 15 years experience advising on transfer pricing matters with a focus on the financial services sector. Nick also has extensive experience in local and global transfer pricing documentation and compliance, tax planning, negotiations of Advance Pricing Agreements, competent authority negotiations, litigation support and audit defence in the financial services industry and other industries for well known Australian and foreign companies. Nick has managed many significant regional and global projects based in Asia-Pacific and European regions and has conducted many in-depth financial and economic analyses throughout the financial services industry. - Current at 01 January 2014
Dritton Jemmalay
Dritton Jemmalay is the Managing Partner of TP benchmark, a specialised full service transfer pricing advisory house founded in 2021, serving multinationals, accounting and law firms across Australia and abroad. Dritton has specialised in transfer pricing for over 16 years, which has included over a decade advising for the Big 4 and a number of years as in-house counsel across a number of Australian listed companies. - Current at 21 January 2025
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