top of page
Search

Key Transfer Pricing Rules in Australia and International Dealings Schedule (IDS) Requirements


Transfer Pricing Rules and IDS
Transfer Pricing Rules and IDS

Follow us on LinkedIn for the latest industry updates and trending news.




For businesses engaged in cross-border transactions with related parties, understanding Australia’s transfer pricing rules and the reporting requirements of the International Dealings Schedule (IDS) is essential to remain compliant and manage tax risk effectively. 


Core Principles of Australia’s Transfer Pricing Rules 

Australia’s transfer pricing rules aim to make sure that businesses price their related-party international dealings in line with what is expected from independent parties in the same situation. Transaction pricing must reasonably reflect: 


  • activities carried out in Australia 

  • Australian assets used (whether sold, lent or licensed) 

  • risks assumed in carrying out these activities. 


Non-compliant pricing arrangements, often referred to as “international profit shifting”, are a key area of focus for the Australian Taxation Office (ATO) in its compliance activities. 


What Is the International Dealings Schedule (IDS)? 

Businesses that engage in international related-party dealings exceeding AUD 2 million within a financial year must complete the International Dealings Schedule (IDS) when lodging their income tax return. 


The IDS requires disclosure of a wide range of information, including: 


  • the nature and amount of certain categories of transactions 

  • details of dealings of a financial nature 

  • receipts or payments of non-monetary consideration 

  • details of restructuring events 

  • details of arm's length methodologies used 

  • the level of documentation held to support the selection and application of the most appropriate arm's length methodologies 

  • details of disposals or acquisitions of any interest in a capital asset. 


Businesses using the simplified transfer pricing record-keeping options may also declare their participation through the IDS. 


Reporting Obligations and Compliance Tips 

The IDS form may change from year to year. It is critical to use the version applicable to the income year being reported. For income years prior to 2011–12, it should refer to Schedule 25A. ATO will publish instructions each year to help businesses complete their IDS.  


The ATO uses the information provided in IDS disclosures to identify potential transfer pricing risks. Therefore, it is crucial to ensure the accuracy of the information provided and to lodge the schedule on time. Failure to comply with IDS requirements may result in penalties or other legal consequences. 


Conclusion

For businesses involved in international related-party transactions, complying with Australia’s transfer pricing framework is not only a regulatory obligation but also a key aspect of tax risk management. Timely and accurate completion of the International Dealings Schedule (IDS) can help minimise exposure to compliance risks and enhance transparency. When in doubt, businesses are encouraged to seek professional advice or consult the latest guidance issued by the ATO. 


Source:

  • International transfer pricing – introduction to concepts and risk assessment, ATO website. 

bottom of page