the taxpayer not being liable to pay withholding tax on an amount where the taxpayer either would have, or might reasonably be expected to have, been liable to pay withholding tax on the amount if the scheme had not been entered into or carried out;

an amount being included in the assessable income of the taxpayer;

the whole or a part of a deduction not being allowable to the taxpayer;

the whole or a part of a capital loss not being incurred by the taxpayer;

the whole or a part of a foreign income tax offset not being allowable to the taxpayer;

the taxpayer being liable to pay withholding tax on an amount.

have particular regard to:

the substance of the scheme; and

any result or consequence for the taxpayer that is or would be achieved by the scheme (other than a result in relation to the operation of this Act); but

disregard any result in relation to the operation of this Act that would be achieved by the postulate for any person (whether or not a party to the scheme).

(a) enabling a taxpayer (a relevant taxpayer) to obtain a tax benefit in connection with the scheme; or

enabling the relevant taxpayer and another taxpayer (or other taxpayers) each to obtain a tax benefit in connection with the scheme;

the manner in which the scheme was entered into or carried out;

the form and substance of the scheme;

the time at which the scheme was entered into and the length of the period during which the scheme was carried out;

the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme;

any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme;

any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme;

any other consequence for the relevant taxpayer, or for any person referred to in paragraph (f), of the scheme having been entered into or carried out;

the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in paragraph (f).

the scheme has been or is entered into after 27 May 1981; or

the scheme has been or is carried out or commenced to be carried out after that day (and is not a scheme that was entered into on or before that day).

the arm’s length contribution made by Australian operations through functions performed, assets used and risks assumed; and

the conditions that might be expected to operate between entities dealing at *arm’s length.

those conditions are taken not to operate; and

instead, the *arm’s length conditions are taken to operate.

if the *transfer pricing benefit arises under subparagraph 815-120(1)(c)(i)—working out the amount (if any) of the entity’s taxable income for the income year; and

if the transfer pricing benefit arises under subparagraph 815-120(1)(c)(ii)—working out the amount (if any) of the entity’s loss of a particular *sort for the income year; and

if the transfer pricing benefit arises under subparagraph 815-120(1)(c)(iii)—working out the amount (if any) of the entity’s *tax offsets for the income year; and

if the transfer pricing benefit arises under subparagraph 815-120(1)(c)(iv)—working out the amount (if any) of *withholding tax payable by the entity in respect of interest or royalties.

(a) those conditions (the actual conditions) differ from the *arm’s length conditions; and

the actual conditions satisfy the cross-border test in subsection (3) for the entity; and

had the arm’s length conditions operated, instead of the actual conditions, one or more of the following would, apart from this Subdivision, apply:

(i) the amount of the entity’s taxable income for an income year would be greater;

(ii) the amount of the entity’s loss of a particular *sort for an income year would be less;

(iii) the amount of the entity’s *tax offsets for an income year would be less;

(iv) an amount of *withholding tax payable in respect of interest or royalties by the entity would be greater.

an actual condition exists that is not one of the arm’s length conditions; or

a condition does not exist in the actual conditions but is one of the arm’s length conditions.

the conditions meet the overseas requirement in the following table for either or both of the entities; or

the conditions operate in connection with a *business that the entity carries on in an *area covered by an international tax sharing treaty.

the entity is also a resident in a country that has entered into an *international tax agreement with Australia containing a *residence article; and

under that residence article, the entity is taken, for the purposes of the agreement, to be a resident only of that other country.

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

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

treat an entity that has no *tax offsets for an income year as having tax offsets for the year of a nil amount.

(a) Article 4 of the United Kingdom convention (within the meaning of the International Tax Agreements Act 1953); or

a corresponding provision of another *international tax agreement.

the respective strengths and weaknesses of the possible methods in their application to the actual conditions;

the circumstances, including the functions performed, assets used and risks borne by the entities;

the availability of reliable information required to apply a particular method;

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.

the functions performed, assets used and risks borne by the entities;

the characteristics of any property or services transferred;

the terms of any relevant contracts between the entities;

the economic circumstances;

the business strategies of the entities.

the difference does not materially affect a condition that is relevant to the method; or

a reasonably accurate adjustment can be made to eliminate the effect of the difference on a condition that is relevant to the method.

be based on the commercial or financial relations in connection with which the actual conditions operate; and

have regard to both the form and substance of those relations.

independent entities dealing wholly independently with one another in comparable circumstances would not have entered into the actual commercial or financial relations; and

independent entities dealing wholly independently with one another in comparable circumstances would have entered into other commercial or financial relations; and

those other commercial or financial relations differ in substance from the actual commercial or financial relations;

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;

a document, or part of a document, prescribed by the regulations for the purposes of this paragraph.

Division 820 (about thin capitalisation) applies to the entity for the income year; and

the *arm’s length conditions affect costs that are *debt deductions of the entity for the income year.

work out the rate as if the arm’s length conditions had operated; but

apply the rate to the debt interest the entity actually issued.

*arm’s length conditions are taken by section 815-115 to operate; and

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

the Commissioner considers that it is fair and reasonable that the actual amount mentioned in subparagraph (b)(i), (ii), (iii) or (iv) (as the case requires) be adjusted accordingly.

taxable income for the income year; or

loss of a particular *sort for the income year; or

*tax offsets, or tax offset of a particular kind, for the income year; or

*withholding tax payable in respect of interest or royalties.

the amendment is made within 7 years after the day on which the Commissioner gives notice of the assessment to the entity; and

the amendment is made for the purpose of giving effect to section 815-115.

the amount of profits actually attributed to the PE is taken not to have been so attributed; and

instead, the *arm’s length profits are taken to have been attributed to the PE.

if the *transfer pricing benefit arises under subparagraph 815-220(1)(b)(i)—working out the amount (if any) of the entity’s taxable income for the income year; and

if the transfer pricing benefit arises under subparagraph 815-220(1)(b)(ii)—working out the amount (if any) of a loss of a particular *sort for the income year; and

if the transfer pricing benefit arises under subparagraph 815-220(1)(b)(iii)—working out the amount (if any) of the entity’s *tax offsets for the income year.

(a) the amount of profits (the actual profits) attributed to the PE differs from the *arm’s length profits for the PE; and

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 an income year would be greater;

(ii) the amount of the entity’s loss of a particular *sort for an income year would be less;

(iii) the amount of the entity’s *tax offsets for an income year would be less.

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

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

treat an entity that has no *tax offsets for an income year as having tax offsets for the year of a nil amount.

the PE were a distinct and separate entity; and

the activities and circumstances of the PE, including the functions performed, assets used and risks borne by the PE, were those of that separate entity; and

the conditions that operated between that separate entity and the entity of which it is a PE were the *arm’s length conditions.

the actual expenditure of an entity is taken to include losses and outgoings; and

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.

the documents covered by this section; and

subject to paragraph (a), the documents covered by section 815-135.

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;

a document, or part of a document, prescribed by the regulations for the purposes of this paragraph.

the amendment is made within 7 years after the day on which the Commissioner gives notice of the assessment to the entity; and

the amendment is made for the purpose of giving effect to section 815-215.

(a) to give effect to Subdivision 815-B or 815-C of the Income Tax Assessment Act 1997 (also the adjustment provision) in relation to a *scheme, the Commissioner:

amends your assessment for an income year; or

(ii) serves you with one or more notices under subsection 128C(7) of the Income Tax Assessment Act 1936 in respect of income that is taken because of the application of the adjustment provision to have been derived in the income year; and

as a result, you are liable to pay an additional amount of income tax or *withholding tax (as the case requires).

50% of your *scheme shortfall amount; or

25% of your scheme shortfall amount if it is *reasonably arguable that the adjustment provision does not apply.

25% of your *scheme shortfall amount; or

10% of your scheme shortfall amount if it is *reasonably arguable that the adjustment provision does not apply.

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 trust’s *reasonably arguable threshold.

you have the *scheme shortfall amount because you are a partner in a partnership that participated in the *scheme; and

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 partnership’s *reasonably arguable threshold.

treat a trust or a partnership that has no *net income for an income year as having a net income for the year of a nil amount; and

treat a trust that has no *tax loss for an income year as having a tax loss for the year of a nil amount; and

treat a partnership that has no *partnership loss for an income year as having a partnership loss for the year of a nil amount.

(a) the matter is a particular way of applying (including not applying) Subdivision 815-B or 815-C of the Income Tax Assessment Act 1997 to a matter (or identical matters); and

the entity does not have records that meet the requirements in this Subdivision for the application of the Subdivision mentioned in paragraph (a) to that matter (or those matters) in that way.

are prepared before the time by which the entity lodges its *income tax return for the income year relevant to the matter (or matters); and

are in English, or readily accessible and convertible into English; and

explain the particular way in which the Subdivision applies (or does not apply) to the matter (or matters); and

(d) explain why the application of the Subdivision to the matter (or matters) in that way best achieves the consistency mentioned in section 815-135 or 815-235 of that Act (as the case requires) (about guidance material).

the *arm’s length conditions relevant to the matter (or matters);

the particulars of the method used and comparable circumstances relevant to identifying those arm’s length conditions;

unless the records are for the non-application of the Subdivision to a matter (or matters)—the result that the application of the Subdivision in that particular way, as compared to the non-application of the Subdivision, has for the operation of this Act in relation to the entity;

for Subdivision 815-B—the actual conditions relevant to the matter (or matters);

for Subdivision 815-C:

the actual profits mentioned in paragraph 815-220(1)(a) of that Act and the *arm’s length profits, to the extent that they are relevant to the matter (or matters); and

the particulars of the activities and circumstances mentioned in subsection 815-225(1) of that Act, to the extent they are relevant to the matter (or matters).

the other entity is a CFC; and

the eligible CFC and the other entity are residents of the same listed country (disregarding section 383 of this Act).

(a) arm’s length conditions are taken by Subdivision 815-B of the Income Tax Assessment Act 1997 to operate for purposes relating to the company; and

had those conditions operated, an amount described in any of the paragraphs of subsection (1) as being an amount shown in the recognised accounts of the company for the statutory account period would have been different;

in respect of a fund that is resident in a country that has not entered into an international tax agreement with Australia containing a business profits article—amounts included in the assessable income of the fund are treated as having a source in Australia because of subsection 815-230(1); or

means an agreement between Australia and another country under which Australia and the other country share tax revenues from activities undertaken in an area identified by or under the agreement; and

(b) does not include an agreement within the meaning of the International Tax Agreements Act 1953.

unless paragraph (b) applies—the greater of the following amounts:

$10,000;

1% of the income tax payable, or *MRRT payable (as the case requires), by the entity for the income year, worked out on the basis of the entity’s *income tax return or *MRRT return (as the case requires); or

if the entity is a trust or partnership—the greater of the following amounts:

$20,000;

2% of the entity’s *net income (if any) for the income year worked out on the basis of the entity’s *income tax return.

(a) in respect of tax other than withholding tax—in relation to income years starting on or after the date mentioned in subsection 815-15(2) of the Income Tax (Transitional Provisions) Act 1997, as inserted by this Part; and

in respect of withholding tax—in relation to income derived, or taken to be derived, in income years starting on or after that date.

in respect of tax other than withholding tax—in relation to income years starting on or after the date mentioned in subsection (2); and

in respect of withholding tax—in relation to income derived, or taken to be derived, in income years starting on or after that date.

1 July 2013; and

(b) the day the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 receives the Royal Assent.