Transfer Pricing Basics — Australian Expat Tax

Your Cross-Border Transaction

Transaction type Annual transaction value (AUD) Direction of transaction Related party jurisdiction Australian entity annual turnover (AUD) AU company tax rate (%) Arm's length price / rate estimated e.g. per unit, % of revenue, or interest rate Actual price / rate charged Same unit as above Preferred TP method Documentation currently prepared?

Transfer Pricing Assessment

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ATO Documentation Thresholds

Threshold	Requirement	Your Status

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OECD TP Methods — Quick Reference

CUP (Comparable Uncontrolled Price): Compares the price charged to an unrelated third party for the same product/service. Most reliable when exact comparables exist. Best for commodity goods and standard loans.

Resale Price (RP): Works backwards from the resale price by deducting an arm's length gross margin. Best for distributors performing simple functions.

Cost Plus (CP): Adds an arm's length mark-up to the supplier's costs. Best for manufacturing and routine services.

TNMM: Compares net profit margins to comparable independent companies. Most widely used globally — flexible and practical when transaction-level comparables are unavailable.

Profit Split (PS): Divides combined profits based on relative contributions. Required when both parties make unique/valuable contributions and no comparables exist (e.g. joint IP development).