Inserts for
Tax Laws Amendment (Cross‑Border Transfer Pricing) Bill 2013: Modernisation of transfer pricing rules

EXPOSURE DRAFT

If you have any comments on this exposure draft they should be sent by 20 December 2012 to:
transferpricing@treasury.gov.au 
or
The Manager
International Tax Integrity Unit
The Treasury
Langton Crescent 
Parkes ACT 2600

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  Schedule 1	The day this Act receives the Royal Assent.		

Schedule 1—Amendments
Part 1—Main amendments
Income Tax Assessment Act 1936
1  Division 13 of Part III
Repeal the Division.
Income Tax Assessment Act 1997
2  At the end of Division 815
Add:
Subdivision 815‑B—Arm’s length principle for cross‑border conditions between entities
Guide to Subdivision 815‑B
815‑101  What this Subdivision is about
This Subdivision applies if an entity would otherwise get a tax advantage in Australia from cross‑border conditions that are inconsistent with the internationally accepted arm’s length principle.
The entity is treated for income tax purposes as if arm’s length conditions had operated.
The Subdivision is to be interpreted consistently with relevant guidance published by the Organisation for Economic Cooperation and Development.
Table of sections
Operative provisions
815‑105	Object
815‑110	Operation of Subdivision
815‑115	Substitution of arm’s length conditions
815‑120	When an entity gets a transfer pricing benefit
815‑125	Meaning of arm’s length conditions
815‑130	Guidance
815‑135	Modification for thin capitalisation
815‑140	Consequential adjustments
815‑145	Amendment of assessments
Operative provisions
815‑105  Object
	(1)	The object of this Subdivision is to ensure that the amount brought to tax in Australia from cross‑border conditions between entities is not less than it would be if those conditions reflected:
	(a)	the arm’s length contribution made by Australian operations through functions performed, assets used and risks assumed; and
	(b)	the conditions that might be expected to operate between entities dealing at *arm’s length.
	(2)	The Subdivision does this by specifying that, where an entity would otherwise get a tax advantage from actual conditions that differ from *arm’s length conditions, the arm’s length conditions are taken to operate for income tax purposes.
815‑110  Operation of Subdivision
	(1)	Nothing in the provisions of this Act other than this Subdivision limits the operation of this Subdivision.
	(2)	Nothing in this Subdivision limits Division 820 (about thin capitalisation) in its application to reduce, or further reduce, *debt deductions of an entity.
815‑115  Substitution of arm’s length conditions
	(1)	For the purposes covered by subsection (2) for an income year:
	(a)	if an entity gets a *transfer pricing benefit in the income year from conditions that operate between the entity and another entity in connection with their commercial or financial relations, those conditions are taken not to operate; and
	(b)	instead, the *arm’s length conditions are taken to operate.
Note:	The conditions that operate include, but are not limited to, such things as price, gross margin, net profit, and the division of profit between the entities.
	(2)	The purposes covered by this subsection are:
	(a)	working out the amount (if any) of the entity’s taxable income for the income year; and
	(b)	working out the amount (if any) of the entity’s loss of a particular *sort for the income year; and
	(c)	working out the amount (if any) of the entity’s *tax offsets for the income year.
815‑120  When an entity gets a transfer pricing benefit
	(1)	An entity gets a transfer pricing benefit in an income year from conditions that operate between the entity and another entity in connection with their commercial or financial relations if:
	(a)	those conditions (the actual conditions) differ from the *arm’s length conditions; and
	(b)	the actual conditions meet the cross‑border requirement in subsection (3) for the entity; and
	(c)	if the arm’s length conditions, instead of the actual conditions, had operated, one or more of the following would, apart from this Subdivision, apply:
	(i)	the amount of the entity’s taxable income for the income year would be greater;
	(ii)	the amount of the entity’s loss of a particular *sort for the income year would be less;
	(iii)	the amount of the entity’s *tax offsets for the income year would be less.
Absence of condition
	(2)	For the purposes of subsection (1), there is taken to be a difference between the actual conditions and the *arm’s length conditions if:
	(a)	an actual condition exists that is not one of the arm’s length conditions; or
	(b)	a condition does not exist in the actual conditions but is one of the arm’s length conditions.
Cross‑border requirement
	(3)	The actual conditions meet the cross‑border requirement for an entity if one or more of the following applies:
	(a)	the other entity is:
	(i)	not an Australian resident; and
	(ii)	not a resident trust estate for the purposes of Division 6 of Part III of the Income Tax Assessment Act 1936 (a resident trust estate) in respect of the income year; and
	(iii)	not a partnership in which all of the partners are, directly or indirectly through one or more interposed partnerships, Australian residents or resident trust estates;
	(b)	the conditions operate between the entity and an *overseas permanent establishment of the other entity;
	(c)	the conditions operate in connection with a business the entity carries on in an *area covered by an international tax sharing treaty.
Nil amounts
	(4)	For the purposes of this section and sections 815‑140 and 815‑305:
	(a)	treat an entity that has no taxable income for an income year as having a taxable income for the year of a nil amount; and
	(b)	treat an entity that has no loss of a particular *sort for an income year as having a loss of that sort for the year of a nil amount; and
	(c)	treat an entity that has no *tax offsets for an income year as having tax offsets for the year of a nil amount.
815‑125  Meaning of arm’s length conditions
	(1)	The arm’s length conditions, in relation to conditions that operate between an entity and another entity, are the conditions that might be expected to operate between independent entities dealing wholly independently with one another in comparable circumstances.
Most appropriate and reliable method to be used
	(2)	In identifying the *arm’s length conditions, use the method, or the combination of methods, that is the most appropriate and reliable, having regard to all relevant factors, including the following:
	(a)	the respective strengths and weaknesses of the possible methods in their application to the actual conditions;
	(b)	the circumstances, including the functions performed, assets used and risks borne by the entities;
	(c)	the availability of reliable information required to apply a particular method;
	(d)	the degree of comparability between the actual circumstances and the comparable circumstances, including the reliability of any adjustments to eliminate the effect of material differences between those circumstances.
Note:	The possible methods include the methods set out in the documents mentioned in section 815‑130 (about relevant guidance material).
Comparability of circumstances
	(3)	In identifying comparable circumstances for the purpose of this section, regard must be had to all relevant factors, including the following:
	(a)	the functions performed, assets used and risks borne by the entities;
	(b)	the characteristics of any property or services transferred;
	(c)	the terms of any relevant contracts between the entities;
	(d)	the economic circumstances;
	(e)	the business strategies of the entities.
	(4)	For the purposes of this section, circumstances are comparable to actual circumstances if, to the extent (if any) that the circumstances differ from the actual circumstances:
	(a)	the difference does not materially affect a condition that is relevant to the method; or
	(b)	a reasonably accurate adjustment can be made to eliminate the effect of the difference on a condition that is relevant to the method.
Relevance of economic substance
	(5)	In identifying the *arm’s length conditions, have regard to the economic substance of what was actually done.
	(6)	However, it is not a requirement in identifying the *arm’s length conditions that the economic substance of what independent entities dealing wholly independently with one another in comparable circumstances might be expected to have done be the same as the economic substance of what was actually done.
	(7)	Despite subsection (6), if independent entities dealing wholly independently with one another in comparable circumstances would not be expected to have done anything, the economic substance of which is substantially similar to the economic substance of what was actually done, the *arm’s length conditions are to be identified as if what was actually done had not been done.
	(8)	To avoid doubt, the legal form of what was actually done does not limit the identification of the *arm’s length conditions.
815‑130  Guidance
	(1)	This Subdivision is to be interpreted so as best to achieve consistency with the documents covered by this section (except where the contrary intention appears).
	(2)	The documents covered by this section are as follows:
	(a)	the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, as approved by the Council of the Organisation for Economic Cooperation and Development and last amended on 22 July 2010;
	(b)	a document, or part of a document, prescribed by the regulations for the purposes of this paragraph.
	(3)	However, the document mentioned in paragraph (2)(a) is not covered by this section if the regulations so prescribe.
	(4)	Regulations made for the purposes of paragraph (2)(b) or subsection (3) may prescribe different documents or parts of documents for different circumstances.
815‑135  Modification for thin capitalisation
	(1)	This section modifies the way an entity to which section 815‑115 applies works out its taxable income or its loss of a particular *sort, for an income year, if:
	(a)	Division 820 (about thin capitalisation) applies to the entity for the income year; and
	(b)	the *arm’s length conditions affect costs that are *debt deductions of the entity for the income year.
	(2)	If working out what those costs would be if the *arm’s length conditions had operated involves applying a rate to a *debt interest:
	(a)	work out the rate as if the *arm’s length conditions had operated; but
	(b)	apply the rate to the debt interest the entity actually issued.
Note:	Division 820 may apply to reduce or further reduce debt deductions.
815‑140  Consequential adjustments
	(1)	The Commissioner may make a determination under subsection (2) in relation to an entity (the disadvantaged entity) if:
	(a)	*arm’s length conditions are taken by section 815‑115 to operate; and
	(b)	the Commissioner considers that, if the arm’s length conditions, instead of the actual conditions, had operated:
	(i)	the amount of the disadvantaged entity’s taxable income for an income year might have been expected to be less than its actual amount; or
	(ii)	the amount of the disadvantaged entity’s loss of a particular *sort for an income year might have been expected to be greater than its actual amount; or
	(iii)	the amount of the disadvantaged entity’s *tax offsets for an income year might have been expected to be greater than their actual amount; or
	(iv)	an amount of *withholding tax payable in respect of interest or royalties by the disadvantaged entity might have been expected to be less than its actual amount; and
	(c)	the Commissioner considers that it is fair and reasonable that the actual amount mentioned in subparagraph (b)(i), (ii), or (iii) (as the case requires) be adjusted accordingly.
	(2)	For the purpose of adjusting an amount as mentioned in paragraph (1)(c), the Commissioner may make a determination stating the amount that is (and has been at all times) the amount of the disadvantaged entity’s:
	(a)	taxable income for the income year; or
	(b)	loss of a particular *sort for the income year; or
	(c)	*tax offsets, or tax offset of a particular kind, for the income year; or
	(d)	*withholding tax payable in respect of interest or royalties.
	(3)	The Commissioner may take such action as the Commissioner considers necessary to give effect to a determination under this section.
	(4)	The Commissioner must give a copy of a determination under this section to the disadvantaged entity.
	(5)	A failure to comply with subsection (4) does not affect the validity of the determination.
	(6)	To avoid doubt, the Commissioner may include all or any determinations under this section in relation to a particular entity, including determinations of different kinds, in the same document.
	(7)	An entity may give the Commissioner a written request to make a determination under this section relating to the entity. The Commissioner must decide whether or not to grant the request, and give the entity notice of the Commissioner’s decision.
	(8)	If the entity is dissatisfied with the Commissioner’s decision, the entity may object, in the manner set out in Part IVC of the Taxation Administration Act 1953, against that decision.
815‑145  Amendment of assessments
	(1)	Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment of an entity for an income year if:
	(a)	the amendment is made within 8 years after the day on which the Commissioner gives notice of the assessment to the entity; and
	(b)	the amendment is made for the purpose of giving effect to section 815‑115.
	(2)	Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment at any time for the purpose of giving effect to section 815‑140.
Subdivision 815‑C—Arm’s length principle for permanent establishments
Guide to Subdivision 815‑C
815‑201  What this Subdivision is about
This Subdivision applies the internationally accepted arm’s length principle in the context of permanent establishments (PEs).
Table of sections
Operative provisions
815‑205	Object
815‑210	Operation of Subdivision
815‑215	Substitution of arm’s length profits
815‑220	When an entity gets a transfer pricing benefit
815‑225	Meaning of arm’s length profits
815‑230	Guidance
815‑235	Amendment of assessments
Operative provisions
815‑205  Object
		The object of this Subdivision is to ensure that the amount brought to tax in Australia by entities operating *permanent establishments is not less than it would be if the permanent establishment were a distinct and separate entity engaged in the same or comparable activities under the same or comparable circumstances, but dealing wholly independently with the other part of the entity.
815‑210  Operation of Subdivision
	(1)	Nothing in the provisions of this Act other than this Subdivision limits the operation of this Subdivision.
	(2)	Nothing in this Subdivision limits Division 820 (about thin capitalisation) in its application to reduce, or further reduce, *debt deductions of an entity.
815‑215  Substitution of arm’s length profits
	(1)	For the purposes covered by subsection (2) for an income year:
	(a)	if an entity gets a *transfer pricing benefit from the attribution of profits to a *PE of the entity, the amount of profits actually attributed to the PE is taken not to have been so attributed; and
	(b)	instead, the *arm’s length profits are taken to have been attributed to the PE.
	(2)	The purposes covered by this subsection are:
	(a)	 working out the amount (if any) of the entity’s taxable income for the income year; and
	(b)	 working out the amount (if any) of a loss of a particular *sort for the income year; and
	(c)	working out the amount (if any) of the entity’s *tax offsets for the income year.
815‑220  When an entity gets a transfer pricing benefit
	(1)	An entity gets a transfer pricing benefit in an income year from the attribution of profits to a *PE if:
	(a)	the entity carries on a business at or through the PE; and
	(b)	the amount of profits (the actual profits) attributed to the PE differs from the *arm’s length profits for the PE; and
	(c)	had the arm’s length profits, instead of the actual profits, been attributed to the PE, one or more of the following would, apart from this Subdivision, apply:
	(i)	the amount of the entity’s taxable income for the income year would be greater;
	(ii)	the amount of the entity’s loss of a particular *sort for the income year would be less;
	(iii)	the amount of the entity’s *tax offsets for the income year would be less.
Nil amounts
	(2)	For the purposes of this section and section 815‑310:
	(a)	treat an entity that has no taxable income for an income year as having a taxable income for the year of a nil amount; and
	(b)	treat an entity that has no loss of a particular *sort for an income year as having a loss of that sort for the year of a nil amount; and
	(c)	treat an entity that has no *tax offsets for an income year as having tax offsets for the year of a nil amount.
815‑225  Meaning of arm’s length profits
	(1)	The arm’s length profits for a *PE of an entity are worked out by allocating the actual expenditure and income of the entity between the PE and the entity so that the profits attributed to the PE equal the profits the PE might be expected to make if:
	(a)	the PE were a distinct and separate entity; and
	(b)	that separate entity were engaged in the same or comparable activities under the same or comparable circumstances; and
	(c)	the conditions that operated between that separate entity and the entity of which it is a PE, in relation to the conditions assumed because of paragraphs (a) and (b) to operate, were the *arm’s length conditions.
	(2)	For the purposes of subsection (1):
	(a)	the actual expenditure of an entity is taken to include losses and outgoings; and
	(b)	the actual income of an entity is taken to include any amount that is, or is to be, included in the entity’s assessable income.
	(3)	The *arm’s length profits for a *PE in Australia are taken, for the purposes of this Act, to be attributable to sources in Australia.
815‑230  Guidance
	(1)	This Subdivision, and section 815‑125, as it applies for the purposes of this Subdivision, are to be interpreted so as best to achieve consistency with:
	(a)	the documents covered by this section; and
	(b)	subject to paragraph (a), the documents covered by section 815‑130;
(except where the contrary intention appears).
 	(2)	The documents covered by this section are as follows:
	(a)	the Model Tax Convention on Income and on Capital, and its Commentaries, as adopted by the Council of the Organisation for Economic Cooperation and Development and last amended on 22 July 2010, to the extent that document extracts the text of Article 7 and its Commentary as they read before 22 July 2010;
	(b)	a document, or part of a document, prescribed by the regulations for the purposes of this paragraph.
	(3)	However, the document mentioned in paragraph (2)(a) is not covered by this section if the regulations so prescribe.
	(4)	A document covered by section 815‑130 is to be disregarded for the purposes of this section if the regulations so prescribe.
	(5)	Regulations made for the purposes of paragraph (2)(b), subsection (3) or subsection (4) may prescribe different documents or parts of documents for different circumstances.
815‑235  Amendment of assessments
		Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment of an entity for an income year if:
	(a)	the amendment is made within 8 years after the day on which the Commissioner gives notice of the assessment to the entity; and
	(b)	the amendment is made for the purpose of giving effect to section 815‑215.
Subdivision 815‑D—Record keeping requirements
Guide to Subdivision 815‑D
815‑301  What this Subdivision is about
This Subdivision sets out optional record keeping requirements and related provisions for entities affected by Subdivision 815‑B or 815‑C.
Records that meet the requirements in this Subdivision are necessary (but not sufficient) to establish a reasonably arguable position about the application of those Subdivisions.
Table of sections
Operative provisions
815‑305	Records about arm’s length principle for cross‑border conditions between entities
815‑310	Records about arm’s length principle for permanent establishments
Operative provisions
815‑305  Records about arm’s length principle for cross‑border conditions between entities
	(1)	An entity may keep records that meet the requirements in this Subdivision for an income year.
Note:	An entity that does not keep these records is treated as not having a reasonably arguable position: see section 284‑180 in Schedule 1 to the Taxation Administration Act 1953.
	(2)	The records must explain:
	(a)	the way in which the entity, or the entity’s agent, treated Subdivision 815‑B as applying to the entity (including not applying to the entity) in relation to the income year; and
	(b)	why the application of Subdivision 815‑B to the entity in that way best achieves consistency with the documents covered by section 815‑130.
	(3)	The records must be in English, or be readily accessible and convertible into English.
	(4)	Without limiting subsection (2), for all conditions operating in the income year that meet the cross‑border requirement in subsection 815‑120(3) for the entity, the records must:
	(a)	identify the actual conditions and the *arm’s length conditions; and
	(b)	contain particulars about the method used and comparable circumstances relevant to identifying the arm’s length conditions; and
	(c)	set out the amount (if any) by which any of the following would, apart from Subdivision 815‑B, be different if the arm’s length conditions, instead of the actual conditions, had operated:
	(i)	the amount of the entity’s taxable income for the income year (if any);
	(ii)	the amount of the entity’s loss of a particular *sort for the income year (if any);
	(iii)	the amount of the entity’s *tax offsets for the income year (if any);
	(iv)	the amounts that are elements in the calculation of those amounts (unless it is not reasonable in the circumstances to do so).
	(5)	The entity must prepare the records before the time by which the entity lodges its *income tax return for the income year.
815‑310  Records about arm’s length principle for permanent establishments
	(1)	An entity may keep records that meet the requirements in this Subdivision for an income year.
Note:	An entity that does not keep these records is treated as not having a reasonably arguable position: see section 284‑180 in Schedule 1 to the Taxation Administration Act 1953.
	(2)	The records must explain:
	(a)	the way in which the entity, or the entity’s agent, treated Subdivision 815‑C as applying to the entity (including not applying to the entity) in relation to a *PE the entity has in the income year; and
	(b)	why the application of Subdivision 815‑C to the entity in that way best achieves consistency with the documents covered by section 815‑230.
	(3)	The records must be in English, or be readily accessible and convertible into English.
	(4)	Without limiting subsection (2), for each *PE the entity has in the income year, the records must:
	(a)	identify the actual profits mentioned in paragraph 815‑220(1)(b) and the *arm’s length profits; and
	(b)	contain particulars about the following things relevant to working out the arm’s length profits:
	(i)	the activities and circumstances assumed because of paragraphs 815‑225(1)(a) and (b);
	(ii)	the particulars mentioned in paragraph 815‑305(4)(b) for the *arm’s length conditions; and
	(c)	set out the amount (if any) by which any of the following would, apart from Subdivision 815‑C, be different if the arm’s length profits, instead of the actual profits, had been attributed to the PE:
	(i)	the amount of the entity’s taxable income for the income year (if any);
	(ii)	the amount of the entity’s loss of a particular *sort for the income year (if any);
	(iii)	the amount of the entity’s *tax offsets for the income year (if any);
	(iv)	the amounts that are elements in the calculation of those amounts (unless it is not reasonable in the circumstances to do so).
	(5)	The entity must prepare the records before the time by which the entity lodges its *income tax return for the income year.
Subdivision 815‑E—Special rules for trusts and partnerships
Guide to Subdivision 815‑E
815‑401  What this Subdivision is about
This Subdivision provides special rules about the way Subdivisions 815‑B, 815‑C and 815‑D apply to trusts and partnerships.
Table of sections
Operative provisions
815‑405	Special rule for trusts
815‑410	Special rules for partnerships
Operative provisions
815‑405  Special rule for trusts
		Subdivisions 815‑B, 815‑C and 815‑D apply in relation to the *net income of a trust in the same way those Subdivisions apply in relation to the taxable income of an entity other than a trust.
815‑410  Special rules for partnerships
	(1)	Subdivisions 815‑B, 815‑C and 815‑D apply in relation to the *net income of a partnership in the same way those Subdivisions apply in relation to the taxable income of an entity other than a partnership.
	(2)	Subdivisions 815‑B, 815‑C and 815‑D apply in relation to a *partnership loss of a partnership in the same way those Subdivisions apply in relation to a *tax loss of an entity other than a partnership.
Taxation Administration Act 1953
3  At the end of subsection 284‑15(1) in Schedule 1
Add:
Note:	For the effect of transfer pricing documentation, see section 284‑180.
4  After subsection 284‑145(2A) in Schedule 1
Insert:
	(2B)	You are also liable to an administrative penalty if:
	(a)	you are liable to pay an additional amount of income tax because the Commissioner amends your assessment for an income year to give effect to Subdivision 815‑B or 815‑C of the Income Tax Assessment Act 1997 in relation to a *scheme; and
	(b)	subparagraph (1)(b)(i) is not satisfied for the scheme.
Note:	Subdivisions 815‑B and 815‑C of the Income Tax Assessment Act 1997 apply the arm’s length principle (about transfer pricing) to entities and permanent establishments respectively.
5  After subsection 284‑150(2) in Schedule 1
Insert:
	(2A)	However, the scheme shortfall amount for a *scheme to which subsection 285‑145(2B) applies is the amount of additional tax you are liable to pay as mentioned in that subsection.
6  At the end of Subdivision 284‑C in Schedule 1
Add:
284‑165  Exception—threshold for penalty arising from arm’s length principle
	(1)	You are not liable to an administrative penalty under subsection 284‑145(2B) if your *scheme shortfall amount is equal to or less than the greater of the following amounts:
	(a)	$10,000;
	(b)	1% of the income tax payable by you for the income year, worked out on the basis of your *income tax return.
	(2)	You are also not liable to an administrative penalty under that subsection if:
	(a)	you have the *scheme shortfall amount because of section 284‑30 (about trusts); and
	(b)	the amount by which the trust would, apart from the application of Subdivision 815‑B or 815‑C of the Income Tax Assessment Act 1997, have had a greater *net income, or a lesser *tax loss, is equal to or less than the greater of the following amounts:
	(i)	$20,000;
	(ii)	2% of the trust’s net income (if any) for that year worked out on the basis of the trust’s *income tax return.
	(3)	You are also not liable to an administrative penalty under that subsection if:
	(a)	you have the *scheme shortfall amount because you are a partner in a partnership that participated in the *scheme; and
	(b)	the amount by which the partnership would, apart from the application of Subdivision 815‑B or 815‑C of that Act, have had a greater *net income, or a lesser *partnership loss, is equal to or less than the greater of the following amounts:
	(i)	$20,000;
	(ii)	2% of the partnership’s net income (if any) for that year worked out on the basis of the partnership’s *income tax return.
Nil amounts
	(4)	For the purposes this section:
	(a)	treat a trust that has no *net income for an income year as having a net income for the year of a nil amount; and
	(b)	treat a partnership that has no net income for an income year as having a net income for the year of a nil amount; and
	(c)	treat a partnership that has no *partnership loss for an income year as having a partnership loss for the year of a nil amount.
7  After Subdivision 284‑C in Schedule 1
Insert:
Subdivision 284‑CA—Special rules for transfer pricing
Table of sections
284‑180	Effect of adequate documentation on whether transfer pricing treatment is reasonably arguable
284‑180  Effect of adequate documentation on whether transfer pricing treatment is reasonably arguable
	(1)	This section applies to an entity in an income year if:
	(a)	the entity or the entity’s agent treated, or made a statement treating, Subdivision 815‑B or 815‑C of the Income Tax Assessment Act 1997 as applying to the entity in a particular way (including not applying to the entity); and
	(b)	the entity does not have records that meet the requirements in Subdivision 815‑D of the Income Tax Assessment Act 1997 for the application of that Subdivision in that way.
	(2)	This Division has effect in relation to the entity as if it were not *reasonably arguable that Subdivision 815‑B or 815‑C of that Act applied in that way.
8  Subdivision 284‑D in Schedule 1 (heading)
Omit “and 284‑C”, substitute “, 284‑C and 284‑CA”.

Part 2—Other amendments
Income Tax Assessment Act 1997
9  Subsection 995‑1(1)
Insert:
area covered by an international tax sharing treaty: if, under an *international tax sharing treaty, Australia and another country share tax revenues from activities undertaken in an area identified by or under the treaty, that area is an area covered by an international tax sharing treaty.
10  Subsection 995‑1(1)
Insert:
arm’s length conditions has the meaning given by section 815‑125.
11  Subsection 995‑1(1)
Insert:
arm’s length profits has the meaning given by section 815‑225.
12  Subsection 995‑1(1)
Insert:
international tax sharing treaty has the meaning given by the Income Tax Assessment Act 1936.
13  Subsection 995‑1(1)
Insert:
PE: see permanent establishment.
14  Subsection 995‑1(1) (definition of transfer pricing benefit)
Repeal the definition, substitute:
transfer pricing benefit has the meaning given by sections 815‑15, 815‑120 and 815‑220.