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Abstract
ATO guidance on transfer pricing risks for inbound distributors On November 23 2018, the ATO released a draft practical compliance guideline (PCG) 2018/D8 that outlines the intended compliance approach to transfer pricing issues related to "inbound distribution arrangements". The High Court made a number of observations with regards to valuation: A 'top-down approach' to valuing land (i.e. by subtracting the value of all non-land assets from the total consideration paid for the shares in Placer, and the residual value is attributable to the land) is appropriate for the purposes of the land-rich duty provisions; Goodwill has no existence independently of the conduct of a business, and goodwill cannot be severed from the business which creates it; and The High Court cautioned against attributing a value to goodwill which already inheres in an asset (e.g. land), which is a source of goodwill. The ruling focuses on the definition of "financial institution" in Australia's double tax agreements with the US and UK; and Taxpayer Alert (TA) 2018/4, released on December 20 2018, which outlines the ATO's concern on tax-driven cross-border financial arrangements where deductions are claimed in Australia (on an accruals basis), but without triggering Australian withholding tax.