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Queensland Government - Queensland Revenue Office
Queensland Government - Queensland Revenue Office

Arm’s length

A contract is at ‘arm’s length’ when it is made by 2 parties acting freely and independently of each other, and without offering favour as a result of some special relationship, such as being related to one another. The terms of the contract should be commercially reasonable, and the contract price should not be deflated or inflated compared to the fair market price.

Where parties are related to each other, the applicant may be required to show that the transaction is at a fair market price. This could be done, for example, by obtaining a professional opinion from another builder, as to the value of the construction work.

Date published: 11 April 2023