Changes to transfer pricing documentation requirements

Documentation requirements

Documentation requirements


Businesses are now required to have the transfer-pricing documentation prepared before the time the entity lodges its income tax return for the income year relevant to the matter (or matters).


In addition, businesses must ensure the transfer-pricing documentation contains an arguable position of why the self-assessment position for transfer pricing outcomes contained in the tax return have been adopted.

It is now required to set out:

  • How trade is conducted within the industry of the taxpayer?
  • Must come to a conclusion as to whether or not the actual arrangements between related parties are different to what arms-length parties do in the industry; and if so
  • Is a transfer pricing benefit capable of being calculated

As you can see, the focus is not just on how price and/or profits compare, but also how business is conducted and how benchmarking analysis is undertaken to ensure like is compared with like.

The 5 Key Questions to answer:

Taxation Ruling TR 2014/8 sets out the five key questions for all enterprises to consider when documenting its transfer pricing treatment:

  • What are the actual conditions that are relevant to the matter?
  • What are the comparable circumstances relevant to identify the arms-length conditions?
  • What are the particulars of the methods used to identify the arm’s length conditions?
  • What are the arm’s length conditions and is/was the transfer pricing treatment appropriate?
  • Have any material changes and updates been identified and updated?

The ruling states:

“The ATO recommends that an entity considers all five questions (not necessarily sequentially) in light of its own facts and circumstances, including the relative complexity and materiality of its relevant dealings and its self-assessment risk”.

The transfer pricing documentation must:

  • Be prepared before income tax return lodged
  • Prepared in English or readily convertible to English
  • Explains the particular way in which Subdivisions 815B Income Tax Assessment Act 1997 (ITAA97) applies or does not apply to the matter
  • Explains why the application of 815B to the matter in that way achieves consistency with the OECD Guidelines and other material specified by regulations
  • Allow the arm’s length conditions applicable to the matter to be readily ascertained
  • Allow the particulars of the method used and comparable circumstances relevant to identifying those arm’s length conditions, to be readily ascertained
  • Allow (unless for the non-application of 815-B) the application of 815-B in a particular way as compared to the application of 815-B has for the operation of the penalty provisions in TAA53, to be readily ascertained
  • Allow the actual conditions of the entity to be readily ascertained

If you should have any queries in regards to transfer pricing documentation, please contact Judy She and Martin van der Saag to discuss in detail.

Judy She
Senior Accountant
T: 02 9984 7774

Martin van der Saag
T: 02 9984 7774


Streamlined accounting for business growth

North Advisory supports business owners in establishing, growing and optimising their companies through streamlined accounting processes, intelligently integrated tech and expert financial collaborations.

Company Set-Up

Start a company from the ground up, with all the must-haves and none of the hassle.


$865 excl. GST

  • A compliant, full trading company set-up from start to finish
  • Management of ABN, business TFN and/or ACN
  • Complete ASIC registration, set-up and management
  • Registration for all relevant taxes like GST and PAYG
  • Expert financial and accounting guidance for company set-up
  • Qualified finance professionals as your ATO and ASIC Agent
  • A comprehensive information package to run your company like a pro

Business Accounting

Access comprehensive accounting services to save time and optimise financial performance.


$300 per month

  • Compilation of Annual Financial Statements
  • Acting as ASIC/ATO agents on your behalf
  • Preparing/lodging business income tax returns
  • Preparing Annual Dividend/Distribution Statement
  • Preparing/lodging quarterly BAS
  • Yearend income tax distribution and optimisation planning
  • Yearend review and adjustment of accounting software
  • Secure online document storage facility
  • In-person, online or over-the-phone meetings
  • Accounting guidance and holistic advisory support

Additional Services

Add extra value where it suits you, from personal wealth management to enterprise accounting solutions.



  • Bookkeeping services
  • SMSF set-up and management
  • Business accounting software set-up
  • Xero accounting software training
  • Discretionary trust set-up
  • Non-trading discretionary investment trust
  • Individual tax returns
  • Personal wealth management
  • Investment and investment property schedules

Driven by our values

Effortless and Seamless

On-Boarding Process

Intuitive and Knowledgeable

Direct Expert

Useful and Articulate



Compliance Solutions


Integrated and Automated