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Australia Provides 2018 Minimum Interest Rate for Simplified Transfer Pricing Record Keeping Option for Low-Level Outbound Loans — Orbitax Tax News & Alerts

On 4 April 2018, the Australian Taxation Office published an update to the practical compliance guideline on simplified transfer pricing record keeping options that was originally published in February 2017 ({News-2017-02-24/A/2-previous coverage}). The update provides the minimum interest rate for the simplified option for low-level outbound loans for the 2018 income year, which is set at 3.79%. This rate forms part of the eligibility conditions for the simplified option, which include, among other conditions, that:

  • The combined cross-border loan balance must be AUD 50 million or less for the Australian economic group at all times throughout the financial year; and
  • For each outbound loan:
    • The interest rate is not less than the following rates for each of the income years that the loan is in effect: 4.91% in the 2015 income year; 4.37% in the 2016 income year; 4.34% in the 2017 income year; 3.79% for the 2018 income year;
    • The funds provided under the loan must be in Australian dollar funds; and
    • The associated expenses paid must be in Australian dollars.

Click the following link for the updated guideline.