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Mid-sized businesses will be adversely impacted by the ATO's new ruling on transfer pricing, according to Grant Thornton.
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ATO ruling to hit mid-sized businesses
13 November 2014
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Jason Casas, national head of transfer pricing at Grant Thornton Australia said the Ruling TR 2014/6, Income tax: transfer pricing – the application of section 815-130 of the Income Tax Assessment Act 1997, announced yesterday, has effectively positioned mid-size businesses as a square peg in a round hole.
Under the ruling, mid-sized businesses will need to prepare the same additional documentation as large, multi-national entities.
“The rules apply the same approach to all Australian companies, both great and small, instead of introducing specific rules better suited to the mid-sized operators and their level of resources available,” Mr Casas said.
“We would’ve liked to have seen some relief from the compliance burden for mid-sized companies created by this ruling."
Despite this, the ruling is not all bad news for medium-sized businesses, according to Mr Casas.
“The good news is the ruling provides additional guidelines for mid-sized businesses on the factors that will prompt the ATO to reconstruct their intercompany transactions. We would like to see the ATO take this one step further by providing public benchmarks around cross border transactions,” he said.
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The ATO received $109 million in the 2013 budget for BEPS compliance and has established a team to review arrangements where taxpayers could be inappropriately shifting profits out of Australia.
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