Updated Transfer Pricing Guideline – PCG 2019/1: What It Means for Inbound Distributors

The Australian Taxation Office (ATO) has released an updated version of Practical Compliance Guideline PCG 2019/1, providing revised guidance on transfer pricing risks associated with inbound distribution arrangements. These updates are significant for multinational groups operating in Australia and should not be overlooked.

Key Changes in the Updated PCG 2019/1

The ATO has refined its compliance approach to ensure that profit markers used to assess transfer pricing risk better reflect current market conditions. This means that businesses can no longer rely on outdated benchmarks when evaluating whether their pricing arrangements fall within acceptable risk zones.

One of the most notable updates is the introduction of a “white zone.” Taxpayers who fall within this category—typically those who have recently received high assurance from the ATO in relation to their transfer pricing—will face reduced compliance scrutiny. The ATO has indicated it will not allocate further compliance resources to review these arrangements, provided there is ongoing consistency with the previously agreed methodology.

Who Does This Apply To?

The updated guideline applies to both existing and new inbound distribution arrangements, covering income years ending after 22 April 2026. Any multinational entity importing and distributing goods into Australia should carefully assess whether their current transfer pricing policies align with the revised expectations.

Why This Matters

The updated PCG 2019/1 directly impacts how the ATO evaluates transfer pricing risk. Businesses that fall outside the low-risk zones may face increased scrutiny, potential audits, and higher compliance costs. Conversely, those that can position themselves within lower-risk categories—or the white zone—may benefit from greater certainty and reduced administrative burden.

What You Should Do Now

If your business has an inbound distribution arrangement, it is essential to:

• Review your current transfer pricing policies and profit margins
• Assess your risk rating under the updated guideline
• Determine whether you may qualify for the white zone
• Ensure documentation is up to date and aligned with ATO expectations

Early review and proactive adjustment can help minimise risk and avoid costly disputes.

How Gavin Ma & Co Can Help

Transfer pricing compliance is becoming increasingly complex, and the ATO’s expectations continue to evolve. At Gavin Ma & Co, we assist businesses in reviewing their transfer pricing arrangements, benchmarking profitability, and preparing robust documentation to meet regulatory requirements.

If you would like to understand how the updated PCG 2019/1 affects your business, contact Gavin Ma & Co for tailored advice and practical support.