Simplified Transfer Pricing Record Keeping: What PCG 2017/2 Means for Australian Businesses

Transfer pricing compliance is a key area of focus for the ATO, particularly for businesses with cross-border transactions. However, not every taxpayer is required to maintain extensive documentation. The ATO’s Practical Compliance Guideline PCG 2017/2 introduces simplified transfer pricing record-keeping options designed to reduce compliance costs for eligible Australian taxpayers.

At Gavin Ma and Co, we help businesses understand where they stand under these rules and how to apply them effectively.

What is PCG 2017/2?

PCG 2017/2 sets out the ATO’s compliance approach to transfer pricing documentation. It provides a framework that allows eligible taxpayers to rely on simplified record-keeping options instead of preparing full transfer pricing documentation.

The guideline is particularly relevant for small to medium-sized businesses that engage in low-risk, routine international related-party dealings.

Who Can Use the Simplified Record-Keeping Options?

Not every business qualifies. To apply the simplified approach, taxpayers generally need to meet conditions such as:

• Having low-value or low-risk international related-party transactions
• Operating within certain defined thresholds set by the ATO
• Not engaging in complex or high-risk transfer pricing arrangements
• Being able to demonstrate that their pricing aligns with commercial behaviour

Examples may include routine services, low-value goods transactions, or straightforward intra-group charges.

Key Benefits of PCG 2017/2

Using the simplified record-keeping approach can provide several advantages:

Reduced Compliance Burden

Businesses may not need to prepare full OECD-style transfer pricing documentation.

Lower Professional Costs

Less documentation means reduced accounting and advisory fees.

Greater Certainty

If the criteria are met, the ATO generally considers the taxpayer’s position as lower risk.

Practical Compliance Approach

The guideline allows businesses to focus on substance over excessive paperwork.

Important Limitations to Be Aware Of

While PCG 2017/2 offers flexibility, it is not a blanket exemption. Businesses should be aware that:

• The ATO can still review and challenge pricing arrangements
• Eligibility must be assessed carefully each year
• Incorrect application may expose taxpayers to penalties or adjustments
• High-risk or complex structures are excluded from simplified treatment

Why Proper Advice Still Matters

Even where simplified record-keeping applies, taxpayers must still ensure their transfer pricing outcomes are commercially reasonable. The ATO expects businesses to be able to demonstrate that their pricing reflects an arm’s length outcome.

This is where professional advice becomes critical. Misinterpreting eligibility or failing to maintain adequate supporting records can still lead to compliance issues.

How Gavin Ma and Co Can Help

At Gavin Ma and Co, we assist clients with:

• Assessing eligibility under PCG 2017/2
• Reviewing cross-border transactions for transfer pricing risk
• Preparing compliant and practical documentation
• Advising on audit readiness
• Structuring international dealings efficiently

We help ensure your business remains compliant while avoiding unnecessary compliance costs.

Final Thoughts

PCG 2017/2 provides valuable relief for eligible taxpayers by simplifying transfer pricing record-keeping obligations. However, determining eligibility and applying the rules correctly requires careful assessment.

If your business has cross-border transactions and you are unsure whether you qualify for simplified record-keeping, professional advice is strongly recommended.