The Assistant Treasurer on 24 July 2013, in releasing the Australian Treasury’s Scoping Paper on Risks to the Sustainability of Australia’s Corporate Tax Base (‘Scoping Paper’) and the Government’s response to the Scoping Paper’s recommendations, noted that ‘[t]he release of the paper follows the significant efforts of the Government to strengthen Australia's corporate tax system. This includes modernising Australia's transfer pricing rules’.

Modernisation of transfer pricing rules was identified as a domestic pressure point requiring unilateral action by States in the February 2013 OECD’s Addressing Base Erosion and Profit Shifting discussion paper (‘OECD BEPS Report’).

This paper seeks to explore in detail the operation of Australia’s new transfer pricing rules before determining whether the ‘modernisation’ provides a solution to BEPS or whether the solution to BEPS lies in international cooperation.