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ARTICLE · 09 JUNE 2025

ATO's transfer pricing rules: how much cross-border debt is too much?

Corrs Chambers Westgarth
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Overview of ATO's practical views under the transfer pricing provisions.

AustraliaTax
Angelina Lagana
Angelina Lagana
Luke Imbriano
Luke Imbriano
Nathan Unitt
Nathan Unitt
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Thanks to Dritton Jemmalay and James Radford from TP Benchmark for their contributions to this article.

The ATO recently released draft Practical Compliance Guideline PCG 2025/D2, outlining its views on the transfer pricing risks associated with the amount of cross-border, related party debt introduced into Australia. We step through the ATO's practical views under the transfer pricing provisions, which the ATO will seek to apply before (and in addition to) the thin capitalisation rules.

The ATO released draft Practical Compliance Guideline PCG 2025/D2, Factors to consider when determining the amount of your inbound, cross-border related party financing arrangement - ATO compliance approach (PCG 2025/D2) on 29 May 2025. PCG 2025/D2 applies on a year-by-year basis in respect of multinational groups with in-bound, cross-border related party financing arrangements into Australia. It applies only in respect of the appropriate quantum of debt that the

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