AUSTRALIA Law and Practice Contributed by: Michael Clough, Jerome Tse, Judith Taylor and Scott Heezen, King & Wood Mallesons
10. Relevance of the United Nations Practical Manual on Transfer Pricing 10.1 Impact of UN Practical Manual on Transfer Pricing Australia’s transfer pricing rules are model almost entirely on the OECD model. 11. Safe Harbours or Other Unique Rules 11.1 Transfer Pricing Safe Harbours Safe harbour rules in the transfer pricing context would generally have to be negotiated with the ATO. 11.2 Rules on Savings Arising From Operating in the Jurisdiction There are no specific rules on this topic. 11.3 Unique Transfer Pricing Rules or Practices A notable rule is that the ATO generally opposes the payment of a market priced guarantee fee to a parent. 11.4 Financial Transactions Australia has aligned with the rules in Chapter X of the OECD Guidelines by adopting the most recently revised version of that guidance (Janu - ary 2022).
8.2 Transfer Pricing Documentation Australia has adopted transfer pricing documen - tation rules based on the structure contemplated by the OECD Guidelines – ie, a master file, a local file and a country-by-country report – as the basis for its legislated documentary require - ments. 9. Alignment With OECD Transfer Pricing Guidelines 9.1 Alignment and Differences Australia’s transfer pricing rules align closely with the OECD Guidelines. 9.2 Arm’s Length Principle Australia still uses the arm’s length principle as the basis of transfer pricing. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project Australia’s transfer pricing laws have been directly affected by the OECD project of which Australia is a keen supporter. 9.4 Impact of BEPS 2.0 Australia has adopted most of the Pillar One rec - ommendations. 9.5 Entities Bearing the Risk of Another Entity’s Operations It would be unusual to allow one entity to guar - antee another’s return. This would require evi - dence that it was normal industry practice (eg, some insurance groups) or specific justification by reference to the facts and circumstances.
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