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The ATO has released a draft update to PCG 2019/1, proposing several important refinements to the transfer pricing risk assessment framework for inbound distribution arrangements. The guidance is relevant for businesses operating as inbound distributors.

Following on from our previous alert, the Australian Taxation Office (ATO) has finalised Practice Statement PS LA 2025/2, which sets out their administrative approach to the Commissioner’s discretion for granting an exemption from Public Country-by-Country reporting obligations. These rules require certain multinational groups to publicly disclose tax and financial information.

The ATO has published its Public Country-by-Country (CbC) reporting implementation guide, effective for reporting periods starting on or after 1 July 2024.

Australia’s Country-by-Country (“CbC”) reporting regime has evolved significantly in recent years, reflecting a broader global shift towards tax transparency

The High Court of Australia has dismissed the Tax Commissioner’s (“the Commissioner”) appeals in FCT v PepsiCo, Inc [2025] HCA 30 (“PepsiCo”), ruling that payments made by Schweppes Australia to PepsiCo’s Australian subsidiary for concentrate did not constitute royalties, and that PepsiCo and Stokely‑Van Camp were not liable for royalty withholding tax or diverted profits tax for the 2018 and 2019 income years.

The ATO’s draft guidance PCG 2025/D4 tightens the rules on when cross-border software payments are treated as royalties and subject to withholding tax. Businesses paying offshore software providers will need to review their arrangements against the new risk framework to avoid increased scrutiny and compliance risks.

The ATO has released its draft guidance ‘PS LA 2025/D1 – Public country-by-country reporting exemptions’ outlining criteria and requirements for taxpayers applying for exemptions from public CbC reporting requirements.

The ATO’s draft guideline PCG 2025/D2 outlines how taxpayers must determine an arm’s length debt amount for related-party loans under transfer pricing rules. It challenges the use of guarantees to inflate borrowing capacity and introduces a risk assessment framework to classify arrangements by compliance risk. Robust documentation is essential to support deductions.

The ATO is cracking down on tax avoidance in the property sector, focusing on international related-party financing. With increased enforcement until 2028, private groups must review their funding structures to ensure compliance and avoid penalties.

The ATO has tightened exemption criteria for country-by-country reporting, effective January 1, 2024. Taxpayers will need to submit more information, aligning with the ATO's focus on international tax risks and local file reporting.

The ATO has increased local file reporting requirements to better understand international tax risks. These changes apply from 1 January 2025, for periods starting on or after 1 January 2024. CbCREs will need more time and resources to comply.

Australia's new Public Country-by-Country reporting law, effective 1 July 2024, mandates multinationals to disclose financial activities, tax practices, and profit allocation per country.