AUSTRALIA Law and Practice Contributed by: Michael Clough, Jerome Tse, Judith Taylor and Scott Heezen, King & Wood Mallesons
several years, including interest deferral provi - sions. Although the dispute related to a period that stretched from 2009 to 2013 and involved earlier iterations of Australia’s transfer pricing rules, the principles discussed are likely to be relevant to the current rules. The Court held that the Commissioner was permitted under the transfer pricing rules to reconstruct those provi - sions of the loan to which independent lenders would not have agreed. Singtel was unsuccess - ful in seeking special leave to appeal to the High Court. The thread running through these cases is that the Commissioner is entitled to add, delete or vary a term of an agreement to achieve a reli - able counterfactual which can be priced. The challenge is to restrict the changes to the actual agreement so that the counterfactual is com - mercially realistic in all the circumstances. These circumstances include risk appetites, which can vary considerably between companies within the same industry. This is sometimes referred to as depersonalising the actual contract. The current Commissioner does not appear in his (Court) Decision Impact Statement to agree with this analysis. 15. Foreign Payment Restrictions 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions Australia has no general restrictions on the remittance of outbound payments. Payers have an obligation to withhold tax at the scheduled
rate from interest, dividends and royalties and a failure to withhold renders the payer liable. The Commissioner does have the power to garnish - ee monies if tax is owed by the recipient. 15.2 Restrictions on Outbound Payments Relating to Controlled Transactions See 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions . 15.3 Effects of Other Countries’ Legal Restrictions Australia will only enforce rules regarding other countries’ legal restrictions on foreign payments if this is covered by a bilateral agreement. 16. Transparency and Confidentiality 16.1 Publication of Information on APAs or Transfer Pricing Audit Outcomes Australia annually publishes the number of APAs issued and transfer pricing audits and the total tax involved. No further details are made public. 16.2 Use of “Secret Comparables” The ATO uses information about comparables that may not be generally known as a basis for its acceptance or refusal of a taxpayer’s position. Because taxpayers bear the onus of proving on the balance of probabilities that the Commis - sioner’s adjustment is not correct and that the taxpayer’s own position is correct, the Com - missioner will generally not need to divulge any comparable if they do not or cannot do so.
21
CHAMBERS.COM
Powered by FlippingBook