The ATO released PS LA 2016/1 on Thur 14.4.2016. It applies from that date and provides guidance to ATO staff when they are proposing transfer pricing adjustments, under Subdiv 815B of the ITAA 1997, involving imported purchases with potential customs implications. The adjustments may have been made in an audit, a settlement, where the entity has objected to an amended assessment or as part of an Advance Pricing Arrangement (APA) or Mutual Agreement Procedure (MAP). [paras 1 & 2]

The Practice Statement says that where an entity gets a transfer pricing benefit and the ATO adjusts the entity’s amount of taxable income, or loss of a particular sort, but does not attribute it to the individual components of the purchases relating to the value of the imported goods, the entity can experience difficulties in obtaining refunds of customs duty or determining additional duty liabilities. In order to satisfy its responsibilities under the Customs Act 1901, an entity may request assistance from the ATO to the extent the adjustments relate to imported goods. [para 3]

ATO staff are required to populate an adjustment table in an audit position paper or in a revised adjustment table which is consistent with the agreed terms of a settlement, objection decision, APA or MAP outcome.

[ATO website – PS LA 2016/1] [LTN 70, 14/4/16]