Other ATO Developments
Decision impact statement: Roche Products
23.01.2009
The Commissioner has issued a decision impact statement on the decision of the AAT (constituted by the President, Downes J) in Roche Products Pty Ltd v FCT ([2008] AATA 639). This was the first decision by an Australian tribunal or court in a substantive transfer pricing matter involving the application of the current Div 13 ITAA 1936. The ATO has not appealed against the AAT’s decision.
The decision impact statement makes the following points:
- Treaty power: Downes J said that there was a lot to be said for the proposition that the double tax treaties, even as enacted as part of the law of Australia, do not go past authorising legislation and do not confer power on the Commissioner to assess. The decision impact statement states that the Commissioner is not bound by these observations and the ATO will continue to adhere to the position outlined in TR 92/11, TR 94/14 and TR 2001/13 that the business profits or associated enterprises article of a double taxation agreement may provide a separate basis for assessing transfer pricing adjustments, independently of Div 13 ITAA 1936.
- Division 13: The AAT was entitled, on the evidence before it, to form its own view of the amount of the arm’s length consideration for the relevant property and decide that sec 136AD(3) ITAA 1936 applied. If warranted, the AAT had the power to apply sec 136AD(4) ITAA 1936 to determine the arm’s length consideration.
- Power to increase assessments: The reasoning regarding the AAT’s power to order an increase in the liability is accepted. It should be noted that the provisions of the ITAA 1936 that authorise amendment of assessments were amended in 2005 and this may have a bearing on the position in circumstances to which the amended provisions apply.
- Arm’s length outcomes: The conclusions reached in relation to the determination of the arm’s length consideration were open on the evidence before the Tribunal. The decision is confined to the facts of the case.
