Section GC 13 — Income Tax Act 2007: Calculation of arm’s length amounts

GC 13 Calculation of arm’s length amounts Use of most reliable measure (1) An arm’s length amount of consideration must be determined by applying whichever 1 or a combination of the methods listed in subsection (2) produces the most reliable measure of the amount that completely independent parties would have agreed upon after real and fully adequate bargaining. Five available methods (2) The arm’s length amount of consideration must be calculated under any 1 or a combination of— (a) the comparable uncontrolled price method: (b) the resale price method: (c) the cost plus method: (d) the profit split method: (e) the comparable profits methods. Criteria for choice and application of method (3) The choice and application of a method or methods must be made having regard to each of the following factors: (a) the degree of comparability between the uncontrolled transactions used for comparison and the controlled transactions of the taxpayer: (b) the completeness and accuracy of the data relied on: (c) the reliability of all assumptions: (d) the sensitivity of a result to possible deficiencies in the data and assumptions. Initial determination by the taxpayer (4) The arm’s length amount of consideration is determined by the taxpayer under subsections (1) to (3), and the amount determined is the arm’s length amount for the purposes of sections GC 7 to GC 11 , unless either— (a) the Commissioner can demonstrate that another amount is a more reliable measure of the arm’s length amount; or (b) the taxpayer has not co-operated with the Commissioner in the Commissioner’s administration of sections GC 6 to GC 14 in relation to the taxpayer, and the non-co-operation has materially affected the Commissioner in that administration. Commissioner’s determination (5) If subsection (4)(a) or (b) applies, the Commissioner determines the amount under subsections (1) to (3) for the purposes of sections GC 7 to GC 11 . Defined in this Act: amount , Commissioner , Compare: 2004 No 35 s GD 13(6)–(9)