INTM432050 - TIOPA10 Part 4: how it works - Transaction or series of transactions

A provision has to be made by means of a transaction or a series of transactions. These terms are defined for the purposes of TIOPA10/Part 4 in TIOPA10/S150. The definition is wide and includes arrangements, understandings and mutual practices whether or not they are, or are intended to be legally enforceable.

A series of transactions is also widely defined and can include transactions entered into in pursuance of, or in relation to, the same arrangement. This would mean that, for example, regular purchases made by a distributor under a distribution agreement would constitute a series of transactions.

Third party involvement

It is not necessary for all transactions in a series to take place between the two related parties. It is possible to have transactions in a series in which a third party is involved or to which neither related person is a party. It is also possible to have a situation where there are no transactions in the series to which both persons are party (see for example INTM432055). The broader scope of the legislation means that some arrangements which were not transfer pricing transactions under the former ICTA88/S770 are within the scope of TIOPA10/Part 4. This includes, for example, `thinly capitalised` taxpayers paying interest to third parties under finance arrangements guaranteed by affiliates.