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ATO commences online banking platform project

Banking on Tax, Issue 11


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In early October 2013, the ATO commenced an “Industry Scoping Review” of the use by Australian customers of online banking platforms. The ATO issued questionnaires to a number of foreign-owned bank branches and subsidiaries operating in Australia. The ATO stated that it is interested in reviewing the source of revenues arising from services and products being provided by global banks to Australian customers via online banking platforms.

Deloitte’s understanding is that the ATO’s risk hypothesis arises from ATO audits of various inbound banks. The ATO review is broad in scope and involves questions addressing both permanent establishment and transfer pricing matters. The review appears to be seeking to identify situations where revenue is generated by the overseas banking group from Australian-based customers, through direct customer access via online systems or platforms.

The issue of concern presumably relates to whether any profits arising from such dealings are appropriately attributed on an arm’s length basis to any Australian parts of the bank that may have had a role in generating that revenue.

The initial response period for the questionnaire was approximately two months. Feedback to the ATO indicated that its approach was too broad and it may be better served in first considering the issues on an industry-wide basis. There are encouraging signs that the ATO may be willing to adapt its approach.

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