Transfer Pricing in Taxation Law
Added on 2023-03-21
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Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Author Note
Taxation Law
Name of the Student
Name of the University
Author Note
1TAXATION LAW
Question 1
Transfer pricing depicts a method of pricing of transactions that are occurring between
different units of a common enterprise. It is generally evident in transactions between an
enterprise and foreign subsidiary. In a situation, where a holding enterprise and the subsidiary
enterprise are entering into the transaction, the transfer pricing is required to be similar as that
of the pricing existing between two non-related parties. Any deviation from the same would
amount to a discrepancy in the tax imposition in Australia. It is a common practice among the
global enterprises to channelize their profits towards the tax havens with the fixation of
prices, which cannot be construed to be realistic, while making transactions with their
subsidiaries. The enterprises who are operating globally and having dealings with its
subsidiaries situated in another tax jurisdiction would be required to approach the Australian
Taxation Office for the purpose of carrying out the review and audit of their transfer pricing.
The Australian Taxation Office would make the required adjustments and impose penalties if
necessary with respect to the transfer pricing. The enterprises with a with a broad scope of
have international transactions with their subsidiaries are more prone to attract the process of
review by the Australian Taxation Office. In case an enterprise is involved in a considerable
amount of transactions with its subsidiaries situated internationally and whose performance
with respect to taxation is low with respect to its industry norms, the same would have a
greater affinity of being subjected to a review by the Australian Taxation Office
(www.ato.gov.au, 2019).
Question 2
The entities that are controlled by a common management are often subjected to
transactions that are required to be carried out between them. This includes the transfer of
items from one of the commonly controlled unit to the other. In a situation, where a one of
Question 1
Transfer pricing depicts a method of pricing of transactions that are occurring between
different units of a common enterprise. It is generally evident in transactions between an
enterprise and foreign subsidiary. In a situation, where a holding enterprise and the subsidiary
enterprise are entering into the transaction, the transfer pricing is required to be similar as that
of the pricing existing between two non-related parties. Any deviation from the same would
amount to a discrepancy in the tax imposition in Australia. It is a common practice among the
global enterprises to channelize their profits towards the tax havens with the fixation of
prices, which cannot be construed to be realistic, while making transactions with their
subsidiaries. The enterprises who are operating globally and having dealings with its
subsidiaries situated in another tax jurisdiction would be required to approach the Australian
Taxation Office for the purpose of carrying out the review and audit of their transfer pricing.
The Australian Taxation Office would make the required adjustments and impose penalties if
necessary with respect to the transfer pricing. The enterprises with a with a broad scope of
have international transactions with their subsidiaries are more prone to attract the process of
review by the Australian Taxation Office. In case an enterprise is involved in a considerable
amount of transactions with its subsidiaries situated internationally and whose performance
with respect to taxation is low with respect to its industry norms, the same would have a
greater affinity of being subjected to a review by the Australian Taxation Office
(www.ato.gov.au, 2019).
Question 2
The entities that are controlled by a common management are often subjected to
transactions that are required to be carried out between them. This includes the transfer of
items from one of the commonly controlled unit to the other. In a situation, where a one of
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