The size of the prize - draft ATO guidance released on sizing of related party debt

Taxpayers should consider the broader commentary within the draft PCG as to what the ATO considers are the key ‘hallmarks’ of a commercially-minded borrowing decision, and compare their own related party debt, as detailed by Sean Madden and Sam van Berkel.

The Australian Taxation Office (ATO), on 29 May 2025, released a 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 (draft PCG). The draft PCG follows earlier amendments (in April 2024) to the transfer pricing rules, which introduced a requirement for general class investors to demonstrate the amount (and not just the pricing) of related party debt is arm...

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Authors: Sean Madden, Sam van Berkel

Published Date: 30 May 2025