Footnotes


Footnotes

Glossary

[1]        Terms of this glossary are adapted from material within this report; Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012; Investopedia, htttp://www.investopedia.com/terms/t/transferprice.asp#axzz1yJYWAaU3 (accessed 20 June 2011); Australian Taxation Office, 'International transfer pricing: applying the arm's length principle', April 2005, http://www.ato.gov.au/content/downloads/LBI_35285_Applying_arms_length_principle.pdf (accessed 27 June 2012); BusinessDictionary.com, http://www.businessdictionary.com/definition/multinational-corporation-MNC.html#ixzz1yyGVrwkt (accessed 27 June 2012).

Chapter 1 - Introduction and conduct of the inquiry

[1]        Votes and Proceedings, House of Representatives, 24 May 2012, p. 1487.

[2]        Selection of Bills Standing Committee, Report No. 6 of 2012, 19 June 2012 as cited in Journals of the Senate, 19 June 2012, p.  2258.

[3]        Treasury, 'Review of transfer pricing rules – Modernising Division 13', http://www.ato.gov.au/taxprofessionals/content.aspx?doc=/content/00300689.htm&pc=001/005/054/007/005&mnu=0&mfp=&st=&cy= (accessed 19 June 2012).

[4]        Mr Bernard Pulle, 'Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012' Bills Digest No. 160, 2011–12, Parliamentary Library, 19 June 2012, p. 4.

[5]        The Hon. David Bradbury, MP, Assistant Treasurer and Minister Assisting for Deregulation, House of Representatives Hansard, 24 May 2012, p. 5480.

[6]        The Hon. David Bradbury, MP, Assistant Treasurer and Minister Assisting for Deregulation, House of Representatives Hansard, 24 May 2012, p. 5480.

[7]        Organisation for Economic Co-operation and Development, Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, p. 17.

[8]        Tax Justice Network Australia, Submission 12, p. 1; see Dev Kar and Sarah Freitas, ‘Illicit Financial Flows from Developing Countries Over the Decade Ending 2009’, Global Financial Integrity, December 2011, pp 5, 48–50; see David McNair and Andrew Hogg, ‘False profits: robbing the poor to keep the rich tax-free’, Christian Aid, March 2009, pp 20, 27.

[9]        UN Tax Subcommittee on Practical Transfer Pricing Issues, 'An introduction to Transfer Pricing', Background Paper, pp 6–7, 8.
The arm's length principle is found in the UN Model Convention Article 9(1).

[10]      Organisation for Economic Co-operation and Development, Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, pp 59–107; Australian Taxation Office, 'International transfer pricing: applying the arm's length principle', April 2005, pp 6–7, http://www.ato.gov.au/content/downloads/LBI_35285_Applying_arms_length_principle.pdf (accessed 27 June 2012).

[11]      Australian Taxation Office, 'International transfer pricing: applying the arm's length principle', April 2005, p. 3, http://www.ato.gov.au/content/downloads/LBI_35285_Applying_arms_length_principle.pdf (accessed 27 June 2012).

[12]      UN Tax Subcommittee on Practical Transfer Pricing Issues, 'An introduction to Transfer Pricing', Background Paper, pp 9, 11.

[13]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 11; Mr Bernard Pulle, 'Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012', Bills Digest No. 160, 2011–12, Parliamentary Library, 19 June 2012, p. 5.

[14]      Australian Taxation Office, 'Legal database: Australian Tax Treaties' http://law.ato.gov.au/atolaw/view.htm?locid='RPC/19530082/ATOtoc'&PiT=99991231235958 (accessed 25 June 2012).

[15]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 9.

[16]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[17]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, 70, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[18]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, 106, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[19]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, 118, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[20]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, 117, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[21]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, 118–120, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[22]      Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74, 1 June 2011, 121, http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/74.html (accessed 25 June 2012).

[23]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 6–7.

[24]      The Hon Bill Shorten, MP, Minister for Financial Services and Superannuation, 'Robust Transfer Pricing Rules for Multinationals', Media release 145, 1 November 2011; see Treasury, 'Review of transfer pricing rules – Modernising Division 13', http://www.ato.gov.au/taxprofessionals/content.aspx?doc=/content/00300689.htm&pc=001/005/054/007/005&mnu=0&mfp=&st=&cy= (accessed 19 June 2012).

[25]      The Hon Bill Shorten, MP, Minister for Financial Services and Superannuation, 'Robust Transfer Pricing Rules for Multinationals', Media release 145, 1 November 2011.

[26]      Treasury, 'Submissions: Consultation Paper – Income Tax: Cross Border Profit Allocation – Review of Transfer Pricing Rules', http://archive.treasury.gov.au/contentitem.asp?NavId=066&ContentID=2305 (accessed 20 June 2012).

[27]      Treasury, 'Stage One Transfer Pricing Reforms: Submissions', http://www.treasury.gov.au/ConsultationsandReviews/Submissions/2012/Stage-one-Transfer-Pricing-Reforms/Submissions (accessed 20 June 2012).

[28]      Treasury, Submission 21, p. 6.

Chapter 2 - Overview of the bill

[1]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 3, 6–7, 17.

[2]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 17.

[3]        Subsection 4(2) of the International Tax Agreement Act 1953 provides that, in the case of inconsistency with the Income Tax Assessment Acts (1936 and 1997), the treaty provisions have precedence.

          See Mr Bernard Pulle, 'Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012', Bills Digest No. 160, 2011–12, Parliamentary Library, 19 June 2012, p. 6; see also discussion in Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 10–11.

[4]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 8.

[5]        [2011] FCAFC 74.

[6]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 17, 24–28.

[7]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 24–25.

[8]        UN Tax Subcommittee on Practical Transfer Pricing Issues, 'An introduction to Transfer Pricing', Background Paper, pp 28–29.

[9]        Australian Taxation Office, 'Income tax: the interaction of Division 820 of the Income Tax Assessment Act 1997 and the transfer pricing provisions', TR 2010/7, http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR20107/NAT/ATO/00001 (accessed 25 June 2012)

[10]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 3.

[11]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 17.

[12]      Taxation Administration Act 1953, Guide to subdivision 284-C, p. 366.

[13]      Mr Bernard Pulle, 'Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012', Bills Digest No. 160, 2011–12, Parliamentary Library, 19 June 2012, p. 14.

[14]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 14.

[15]      The Hon. David Bradbury, MP, Assistant Treasurer and Minister Assisting for Deregulation, House of Representatives Hansard, 24 May 2012, p. 5480

[16]      The Hon. David Bradbury, MP, Assistant Treasurer and Minister Assisting for Deregulation, House of Representatives Hansard, 24 May 2012, p. 5480.

[17]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 3.

[18]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 5, 7–13.

[19]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 7–8.

Chapter 3 - Revenue implications and judicial commentary

[1]        Treasury, Submission 21, p. 1.

[2]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 3.

[3]        Treasury, Submission 21, p. 5.

[4]        Committee Hansard, 26 July 2012, p. 1.

[5]        For example Moore Stephens, Submission 18, p. 2; Moore Stephens, 'Transfer Pricing Reform and its Impact on Australian Multinationals', 1 July 2012, attachment to Supplementary Submission 18, p. 5.

[6]        KPMG, Submission 13, p. 1.

[7]        Corporate Tax Association, Submission to Consultation Paper, 30 November 2011, p. 8

[8]        PricewaterhouseCoopers, Submission 17.

[9]        PricewaterhouseCoopers, Submission 17, p. 4.

[10]      Mr Tony McDonald, General Manager, International Tax and Treaties Division, Revenue Group, Committee Hansard, 26 July 2012, p. 55.

[11]      Committee Hansard, 26 July 2012, p. 62.

[12]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 14.

[13]      Moore Stephens, Supplementary Submission 18, p. 1; see also Moore Stephens, Submission 18, pp 2–3.

[14]      Committee Hansard, 26 July 2012, p. 16.

[15]      Deloitte, Submission to Consultation Paper, p. 2.

[16]      Committee Hansard, 26 July 2012, p. 53.

[17]      The Institute of Chartered Accountants in Australia, Submission 19, p. 4.

[18]      The Tax Institute, Submission 15, pp 6–7.

[19]      Treasury, answer to question on notice, 26 July 2012, (received 9 August 2012), p. 7.

[20]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 12. See Roche Products Pty Limited and Commissioner of Taxation [2008] AATA 639 (22 July 2008) and SNF Australia Pty Ltd v Commissioner of Taxation [2010] FCA 635.

[21]      Chevron Australia Pty Ltd, Submission to Consultation Paper, p. 4; see Undershaft (No 1) Limited v Commissioner of Taxation [2009] FCA 41, 45–46 and Commissioner of Taxation v Lamesa Holdings BV (1997) 77 FCR 597, 600, Chong v Commissioner of Taxation (2000) 101 FCR 134, 24–27.

[22]      Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 12.

[23]      For example, The Tax Institute, Submission 15, p. 6; Chartered Accountants in Australia, Submission 19, p. 1; Chevron Australia Pty Ltd, Submission to Consultation Paper, p. 5.

[24]      Law Council of Australia, Submission 9, pp 1–2; Rule of Law Institute of Australia, Submission 20, p. 2.

[25]      Chevron Australia Pty Ltd, Submission to Consultation Paper, pp 4, 7; Moore Stephens, 'Transfer Pricing Reform of Australia's Transfer Pricing Regime', 1 July 2012, p. 3; Institute of Chartered Accountants in Australia, Submission 19, p. 2.

[26]      Institute of Chartered Accountants in Australia, Submission 19, p. 4.

[27]      Moore Stephens, 'Transfer Pricing Reform of Australia's Transfer Pricing Regime', 1 July 2012, p. 3.

[28]      Committee Hansard, 26 July 2012, p. 17.

[29]      Treasury, Submission 21, p. 12.

[30]      Moore Stephens, Supplementary Submission 18, p. 2.

[31]      Committee Hansard, 26 July 2012, p. 60.

Chapter 4 - Australian Taxation Office rulings

[1]        Treasury, Submission 21, pp 22–23.

[2]        Mr Richard Atkinson, MCA Taxation Committee Representative and General Manager Transfer Pricing, Rio Tinto, Committee Hansard, 26 July 2012, p. 6.

[3]        Committee Hansard, 26 July 2012, p. 14.

[4]        Committee Hansard, 26 July 2012, pp 40–41.

[5]        GE, Submission 1, p. 2; Australian Private Equity and Venture Capital Association Ltd, Submission 22, p. 2.

[6]        PricewaterhouseCoopers, Submission 17, p. 3.

[7]        Institute of Chartered Accountants in Australia, Submission 19, p. 4.

[8]        Committee Hansard, 26 July 2012, p. 29.

[9]        Committee Hansard, 26 July 2012, pp 16–17.

[10]      Diana Scolaro, 'Tax Rulings: Opinion or Law? The Need for an Independent 'Rule-Maker',' Revenue Law Journal: Volume 16: Issue 1, Article 7, 2006, pp 13–18.

[11]      Commissioner of Taxation v Indooroopilly Children Services (Qld) Pty Ltd [2007] FCAFC 16 in PricewaterhouseCoopers, additional information, exhibit D, received 31 July 2012.

[12]      Commissioner of Taxation v Indooroopilly Children Services (Qld) Pty Ltd [2007] FCAFC 16 in PricewaterhouseCoopers, additional information, exhibit D, received 31 July 2012.

[13]      Moore Stephens, 'Transfer Pricing Reform and its Impact on Australian Multinationals', 1 July 2012, attachment to Supplementary Submission 18, p. 1. The article discusses at length 'inherent problems' with relying on rulings which are based on various OECD Guidelines and highlights the tensions between profit and transaction based arm's length methods (pp 2–3).

[14]      For example, PricewaterhouseCoopers, additional information, exhibits B and C, received 31 July 2012.

[15]      Michael D'Ascenzo, Commissioner , 'In the best interests of Australia', Opening speech at the Corporate Tax Association Convention, Melbourne, 15 June 2009 in PricewaterhouseCoopers, additional information, exhibit B, received 31 July 2012.

[16]      Jim Killaly, Deputy Commissioner (Large Business and International), 'Distinguishing between business driven and tax driven restructuring', speech by the to The Tax Institute's Victorian State Convention, 9 October 2008 in PricewaterhouseCoopers, additional information, exhibit C, received 31 July 2012.

[17]      Committee Hansard, 26 July 2012, p. 28.

Chapter 5 - Submitters' views on Parliament's intention

[1]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 7.

[2]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 5, 7–13.

[3]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 7–8.

[4]        Institute of Chartered Accountants in Australia, Submission 19, p. 1.

[5]        Andrew Palmer and Charles Sampford, 'Retrospective legislation in Australia: looking back at the 1980s', 22 Federal Law Review 217, 1994, p. 223 in Peter Collins et al, 'The smoke and mirrors around the "stage one" transfer pricing reforms', The Tax Specialist: Volume 15, June 2012, p. 210.

[6]        Corporate Tax Association of Australia, Exposure Draft Submission, p. 1.

[7]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 10. See also Moore Stephens, 'Transfer Pricing Reform and its Impact on Australian Multinationals', 1 July 2012, p. 1.

[8]        Ms Ardele Blignault, Vice President Government Relations, GE, Committee Hansard, 26 July 2012, p. 9.

[9]        GE, Submission 1, p. 2.

[10]      PricewaterhouseCoopers, Submission 17, p. 3; Ms Ardele Blignault, Vice President Government Relations, GE, Committee Hansard, 26 July 2012, p. 9; Mr Frank Drenth, Executive Director, Corporate Tax Association of Australia, Committee Hansard, 26 July 2012, p. 17.

[11]      Mr Frank Drenth, Executive Director, Corporate Tax Association of Australia, Committee Hansard, 26 July 2012, p. 17.

[12]      The Tax Institute, Submission 15, p. 4.

[13]      The Tax Institute, Submission 15, p. 7.

[14]      The Tax Institute, Submission 15, pp 4–5.

[15]      The Tax Institute, Submission 15, pp 9–10; Deloitte, Exposure Draft Submission, pp 2–3.

[16]      Deloitte, Submission 8, p. 1.

[17]      Moore Stephens, Submission 18, p. 3; see also Moore Stephens, 'Transfer Pricing Reform and its Impact on Australian Multinationals', attachment to Supplementary Submission 18, p. 5.

[18]      Treasury, Submission 21, p. 19.

[19]      International Tax Agreement Act 1953, Comlaw website, http://www.comlaw.gov.au/Details/C2011C00513 (accessed 25 July 2012).

[20]      GE Capital Finance Pty Ltd v Federal Commissioner of Taxation (2007) 159 FCR 473, 40 in Peter Collins et al, 'The smoke and mirrors around the "stage one" transfer pricing reforms', The Tax Specialist: Volume 15(5), June 2012, pp 212–213.

[21]      Income Tax Assessment Amendment Act 1982, s. 21, www.comlaw.gov.au/Details/C2004A02588 (accessed 24 July 2012).

[22]      Taxation Laws Amendment Act 1984, ss. 170(14), www.comlaw.gov.au/Details/C2004A02987 (accessed 24 July 2012).

[23]      Taxation Laws Amendment Act 1984, www.comlaw.gov.au/Details/C2004A02987 (accessed 24 July 2012) in Treasury, Submission 21, p. 16.

[24]      Peter Collins et al, 'The smoke and mirrors around the "stage one" transfer pricing reforms', The Tax Specialist: Volume 15(5), June 2012, pp 212–213.

[25]      Peter Collins et al, 'The smoke and mirrors around the "stage one" transfer pricing reforms', The Tax Specialist: Volume 15(5), June 2012, p. 214.

[26]      Mr Andrew England, Chief Tax Counsel, Australian Taxation Office, Committee Hansard, 26 July 2012, p. 57.

[27]      [2008] AATA 639 (22 July 2008), 191.

[28]      [2010] FCA 635, 23–24.

[29]      Treasury, Submission 21, p. 12. Treasury also argued that, although submitters cited a number of obiter comments opposing the use of treaties to make adjustments, none of these cases directly addressed the status of the treaty based transfer pricing rules. For example, Goldberg J in Chong v Commissioner of Taxation (2000 101 FCR 134 at [27], [44]; Middleton J in GE Capital Finance Pty Lt v Federal Commissioner of Taxation (2007) 159 FCR 473 at [27], [29], [36], [45]–[46]; Lindgren J in Undershaft (No 1) Ltd v FCT (2009) 175 FCD 150 at [17] and [27].

[30]      Treasury, Submission 21, p. 13.

[31]      Middleton J in SNF Australia Pty Limited v Commissioner of Taxation [20108] FCA 635, 23–24.

Chapter 6 - Parliament's intention since 1982

[1]        Mr Tony McDonald, General Manager, International Tax and Treaties Division, Revenue Group, Committee Hansard, 26 July 2012, p. 55.

[2]        Treasury, Submission 21, p. 15.

[3]        Mr Tony McDonald, General Manager, International Tax and Treaties Division, Revenue Group, Treasury, Committee Hansard, 26 July 2012, p. 57.

[4]        Income Tax Assessment Amendment Act 1982, www.comlaw.gov.au/Details/C2004A02588 (accessed 24 July 2012).

[5]        Treasury, Submission 21, p. 15.

[6]        Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, p. 6, www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012), see Treasury, Submission 21, p. 16.

[7]        Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, p. 79, www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012); see Treasury, Submission 21, p. 17.

[8]        Treasury, Submission 21, p. 16.

[9]        Income Tax Assessment Amendment Act 1982, www.comlaw.gov.au/Details/C2004A02588 (accessed 24 July 2012).

[10]      Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, pp 63–64. www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012); see Treasury, Submission 21, p. 15.

[11]      Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, p. 81, www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012).

[12]      Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, p. 80, www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012); see Treasury, Submission 21, p. 15.

[13]      Treasury, Submission 21, p. 16.

[14]      For discussion on its repeal refer to '1984 amendments to the penalty provisions' below.

[15]      Income Tax Assessment Amendment Act 1982, www.comlaw.gov.au/Details/C2004A02588 (accessed 24 July 2012); see Treasury, Submission 21, p. 17.

[16]      Treasury, Submission 21, p. 17.

[17]      Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, p. 81, www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012); see Treasury, Submission 21, p. 18.

[18]      Explanatory Memorandum, Income Tax Assessment Amendment Bill 1982, p.6, www.austlii.edu.au/au/legis/cth/bill_em/itaab1982330/memo_0.pdf (accessed 24 July 2012); see Treasury, Submission 21, p. 18.

[19]      Treasury, Submission 21, p. 18.

[20]      Taxation Laws Amendment Act 1984, Comlaw website, www.comlaw.gov.au/Details/C2004A02987 (accessed 24 July 2012).

[21]      Explanatory Memorandum – Part A, Taxation Laws Amendment Bill 1984, p. 12, www.austlii.edu.au/au/legis/cth/bill_em/tlab1984258/memo_1.pdf (accessed 24 July 2012), see also p. 32.

[22]      Treasury, Submission 21, p. 18.

[23]      Explanatory Memorandum – Part B, Taxation Laws Amendment Bill 1984, p. 33, http://www.austlii.edu.au/au/legis/cth/bill_em/tlab1984258/memo_0.pdf (accessed 25 July 2012).

[24]      International Tax Agreement Act 1953, Comlaw website, http://www.comlaw.gov.au/Details/C2011C00513 (accessed 25 July 2012).

[25]      Treasury, Submission 21, p. 19. See submitters' comments on ss. 4(2) of the ITAA 1953 in Chapter 5.

[26]      Explanatory Memorandum – Part B, Taxation Laws Amendment Bill 1984, p. 33, http://www.austlii.edu.au/au/legis/cth/bill_em/tlab1984258/memo_0.pdf (accessed 25 July 2012); see Treasury, Submission 21, pp 19–20.

[27]      Income Tax (Franking Deficit) Amendments Act 1995, www.comlaw.gov.au/Details/C2004A05019 (accessed 24 July 2012).

[28]      Explanatory Memorandum, Income Tax (Franking Deficit) Amendments Bill 1995, p. 5, www.austlii.edu.au/au/legis/cth/bill_em/itdab1995327/memo_0.pdf (accessed 24 July 2012).

[29]      Treasury, Submission 21, p. 20

[30]      Treasury, Submission 21, pp 20–21;
see also New Business Tax System (Thin Capitalisation) Act 2001, www.comlaw.gov.au/Details/C2004A00897 (accessed 24 July 2012).

[31]      Explanatory Memorandum, New Business Tax System (Thin Capitalisation) Bill 2001, www.austlii.edu.au/au/legis/cth/bill_em/nbtscb2001489/memo1.html (accessed 24 July 2012); see Treasury, Submission 21, p. 21.

[32]      Treasury, Submission 21, p. 21.

Chapter 7 - Parliament's intention expressed in the 2003 amendment

[1]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, p. 3.

[2]        Explanatory Memorandum, Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, paragraph 1.17, pp 7–8.

[3]        The Tax Institute, Submission to Consultation Paper, p. 12; Chevron Australia Pty Ltd, Submission 16, p. 6; Law Council of Australia, Submission 9, pp 1–2; Institute of Chartered Accountants in Australia, Submission 19, p. 1.

[4]        Chevron Australia Pty Ltd, Consultation Paper Submission, p. 4.

[5]        Rule of Law Institute of Australia, Submission 20, p. 2.

[6]        Peter Collins et al, 'The smoke and mirrors around the "stage one" transfer pricing reforms', The Tax Specialist, June 2012, p. 215.

[7]        Explanatory Memorandum, International Tax Agreement Bill 2003, p. 4, http://www.austlii.edu.au/au/legis/cth/bill_em/itaab2003389/memo1.html (accessed 10 August) in PricewaterhouseCoopers, additional information, exhibit A, received 31 July 2012.

[8]        Explanatory Memorandum, International Tax Agreement Bill 2003, p. 4, http://www.austlii.edu.au/au/legis/cth/bill_em/itaab2003389/memo1.html (accessed 10 August) in PricewaterhouseCoopers, additional information, exhibit A, received 31 July 2012.

[9]        Income Tax Assessment Act 1936 (Act No. 30 of 2003), volume 11, p. 136, http://www.comlaw.gov.au/Details/C2004C04679 (accessed 10 August 2012).

[10]      Income Tax Assessment Act 1936, http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1936240/s170.html (accessed 10 August 2012).

[11]      Explanatory Memorandum, International Tax Agreement Bill 2003, p. 140.

[12]      Explanatory Memorandum, International Tax Agreement Bill 2003, p. 140; see Treasury, Submission 21, p. 21.

[13]      Paragraph 2, Article 7 of the UK Convention states: 'Subject to the provisions of paragraph 3 of this Article, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated in that other State, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment or with other enterprises.' http://law.ato.gov.au/atolaw/view.htm?docid=RPC/19530082/Sch1-Agt0-Art7 (accessed 24 July 2012).

[14]      United Kingdom Convention, http://law.ato.gov.au/atolaw/view.htm?docid=RPC/19530082/Sch1-Agt0-Art9 (accessed 24 July 2012).

[15]      Treasury, Submission 21, p. 21.

Chapter 8 - Implications for taxpayers and international trading partners

[1]        Senate Scrutiny of Bills Committee, Alert Digest 6/12, p. 94.

[2]        The Tax Institute, Submission 15, p. 2.

[3]        PricewaterhouseCoopers, Submission 17, p. 2.

[4]        Moore Stephens, Submission 18, p. 2.
A revised version of the OECD Guidelines was introduced in 2010.

[5]        Ernst and Young, Submission 4, p. 3.

[6]        Ernst and Young, Submission 4, p. 4.

[7]        Law Council of Australia, Submission 9, p. 3.

[8]        Minerals Council of Australia, Submission 7, p. 3; Law Council of Australia, Submission 9, p. 3.

[9]        Mr Chris Peadon, Member, Taxation Committee of the Business Law Section Law Council of Australia, Committee Hansard, 26 July 2012, p. 30.

[10]      Moore Stephens, Submission 18, p. 1.

[11]      Australian Private Equity and Venture Capital Association Ltd, Submission 22, p. 2.

[12]      RSM Bird Cameron, Submission 11, p. 3.

[13]      American Chamber of Commerce in Australia, Submission 14, p. 1.

[14]      Business and Industry Advisory Committee to the OECD, Submission 10, pp 1–2.

[15]      Deloitte, Submission to Consultation Paper, p. 2.

[16]      RSM Bird Cameron, Submission 11, p. 3; The Tax Institute, Submission 15, p. 8; PricewaterhouseCoopers, Submission 17, p. 3; Institute of Chartered Accountants in Australia, Submission 19, p. 4.

[17]      Chevron Australia Pty Ltd, Submission 16, p. 1.

[18]      KPMG, Submission 13, p. 3.

[19]      American Chamber of Commerce in Australia, Submission 14, p. 1.

[20]      GE, Submission 1, p. 3.

[21]      Ms Ardele Blignault, Vice President Government Relations, GE, Committee Hansard, 26 July 2012, p. 9.

[22]      GE, Submission 1, p. 3; Business and Industry Advisory Committee to the OECD, Submission 10, p. 2; PricewaterhouseCoopers, Submission 17, p. 3; Moore Stephens, Submission 18, p. 2; Moore Stephens, 'Transfer Pricing Reform and its Impact on Australian Multinationals', 1 July 2012, attachment to Supplementary Submission 18, pp 5–6.

[23]      Article 24 of the New Zealand Treaty and Article 26 of the Japan Treaty provided as an example in Moore Stephens, Submission 18, p. 2.

[24]      Treasury, Submission 21, p. 11.

[25]      GE, Submission 1, p. 3; Chevron Australia Pty Ltd, Submission to Consultation Paper, p. 6.

[26]      Ms Amanda Leckie, Tax Manager, GE, Committee Hansard, 26 July 2012, p. 10.

[27]      Chevron Australia Pty Ltd, Consultation Paper Submission, p. 6.

[28]      PricewaterhouseCoopers, additional information, received 31 July 2012.

[29]      US Treasury, Technical Explanation of the Convention Between the  Government of the United States of America and the Government of Australia Signed in Sydney on August 6, 1982 (Australia-US tax treaty), pp 1–2 in PricewaterhouseCoopers, additional information, exhibit E, received 31 July 2012.

[30]      American Chamber of Commerce in Australia, Submission 14, p. 2.

[31]      Treasury, Submission 21, p. 11.

[32]      KPMG, Submission 13, p. 2.

[33]      GM Holden Ltd, Submission 5, p. 2.

[34]      Moore Stephens, Supplementary Submission 18, pp 1–2.

[35]      Institute of Chartered Accountants in Australia, Submission 19, pp 4–5.

[36]      Mr Richard Atkinson, MCA Taxation Committee Representative and General Manager Transfer Pricing, Rio Tinto, Committee Hansard, 26 July 2012, p. 5. See also Mr Frank Drenth, Executive Director, Corporate Tax Association of Australia, Committee Hansard, 26 July 2012, p. 16.

[37]      Treasury, Submission 21, p. 8.

[38]      Committee Hansard, 26 July 2012, p. 54.

[39]      Treasury, answer to question on notice, 26 July 2012 (received 9 August 2012), p. 2.

[40]      Treasury, answer to question on notice, 26 July 2012 (received 9 August 2012), p. 2.

[41]      CPA Australia, Exposure Draft Submission, p. 1.

[42]      RSM Bird Cameron, Submission 11, p. 4.

[43]      Mr Michael Jenkins, Assistant Commissioner, Jurisdictional Income Practice, Large Business and International, Australian Taxation Office, Committee Hansard, 26 July 2012, p. 54.

Chapter 9 - Transaction based arm's length assessments

[1]        Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 4–5.

[2]        Federal Chamber of Automotive Industries, Exposure Draft Submission, p. 2.

[3]        Australian Bankers' Association, Submission 3, p. 2.

[4]        For example Ernst and Young, Exposure Draft Submission, pp 2–3; Corporate Tax Association of Australia, Exposure Draft Submission, p. 2; Minerals Council of Australia, Submission 7, p. 3; Moore Stephens, Submission 18, p. 3.

[5]        Law Council of Australia, Submission 9, pp 3–4.

[6]        Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, pp 8–9.

[7]        Deloitte, Exposure Draft Submission, pp 1–2.

[8]        Deloitte, Exposure Draft Submission, p. 2.

[9]        Australian Bankers' Association, Submission to Consultation Paper, pp 8–9.

[10]      The Institute of Chartered Accountants, Submission 19, p. 3; Organisation for Economic Co-operation and Development, Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, 2010, paragraph 1.65 (paragraph 1.37 of the previous version).

[11]      For example see Institute of Chartered Accountants, Submission 19, p. 4.

[12]      Organisation for Economic Co-operation and Development, Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, 2010, paragraph 1.64 (see paragraph 1.36 of the previous version).

[13]      RSM Bird Cameron, Submission 11, p. 4.

[14]      Business and Industry Advisory Committee to the OECD, Submission 10, p. 3.

[15]      Minerals Council of Australia, Submission 7, p. 3.

[16]      Deloitte, Exposure Draft Submission, p. 2.

[17]      Ernst and Young, Exposure Draft Submission, p. 3.

[18]      PricewaterhouseCoopers, Submission to Consultation Paper, p. 10.

[19]      Treasury, Submission 21, p. 9.

[20]      Corporate Tax Association of Australia Inc, Exposure Draft Submission, p. 2; Federal Chamber of Automotive Industries, Submission 6, p. 3; PricewaterhouseCoopers, Exposure Draft Submission, p. 8.

[21]      GM Holden Ltd, Submission 5, p. 2.

[22]      Corporate Tax Association, Exposure Draft Submission, pp 2–3.

[23]      Committee Hansard, 26 July 2012, p. 23.

[24]      Corporate Tax Association, Submission to Consultation Paper, 30 November 2011, pp 4–5.

[25]      PricewaterhouseCoopers, Exposure Draft Submission, p. 8; Federal Chamber of Automotive Industries, Submission 6, p. 2.

[26]      Australian Customs and Border Protection Service, Submission 23, p. 1.

[27]      Australian Customs and Border Protection Service, Submission 23, p. 1.

[28]      Treasury, Submission 21, p. 9.

[29]      Committee Hansard, 26 July 2012, pp 54–55.

[30]      An APA is an arrangement that determines, in advance of controlled transactions, an appropriate set of criteria (for example, method, comparables and appropriate adjustments thereto, critical assumptions as to future events) for the determination of the transfer pricing of those transactions over a fixed period of time.

An APA will generally apply for three to five years but may be longer, for example, where the covered international related party dealings continue for a period in excess of five years. An APA can be concluded either unilaterally, bilaterally or multilaterally. See Practice Statement Law Administration PS LA 2011/1, 'ATO's Advance Pricing Arrangement Program', http://law.ato.gov.au/atolaw/view.htm?docid=PSR/PS20111/NAT/ATO/00001 (accessed 6 August 2012).

[31]      Australian Taxation Office, Practice Statement Law Administration PS LA 2011/1, 'ATO's Advance Pricing Arrangement Program', http://law.ato.gov.au/atolaw/view.htm?docid=PSR/PS20111/NAT/ATO/00001 (accessed 6 August 2012).

[32]      Committee Hansard, 26 July 2012, p. 61.

[33]      Treasury, answer to question on notice, 26 July 2012, (received 9 August 2012), p. 6.

[34]      See discussions by Ms Vanda Davis, Chair of the Taxation Committee of the Federal Chamber of Automotive Industries, Committee Hansard, 26 July 2012, 25.

[35]      Committee Hansard, 26 July 2012, p. 62.

Coalition Senators' Dissenting Report

[1]        Institute of Chartered Accountants in Australia, Submission 19, p. 1.

[2]        PricewaterhouseCoopers, Submission 17, p. 2.

[3]        Law Council of Australia, Submission 9, p. 3.

[4]        Moore Stephens, Submission 18, p. 1.

[5]        American Chamber of Commerce in Australia, Submission 14, p. 1.

[6]        Senate Scrutiny of Bills Committee, Alert Digest 6/12, p. 94.

APPENDIX 3 - The ATO’s Tax Rulings[1]

[1]        The following appendix is taken directly from Treasury, Submission 21, pp 22–23.