Several recent developments have highlighted the difficult transfer pricing issues that arise around the pricing of inter-company debt, and capital structures generally. Over the past several years, in common with other revenue authorities around the world, the ATO has focused on transfer pricing issues associated with inter-company debt and guarantee fees. The ATO recently released draft Taxation Determination TD2007/D20, regarding the interaction of Australia's transfer pricing and thin capitalisation rules. This signalled a further evolution in the ATO's approach to the application of the arm's length principle to financing structures.
In this session the issues arising from these developments were discussed, specifically, both the higher level issues about applying the arm's length principle, and some of the practical issues involved in undertaking supporting analysis.