Australia sets 5.69% simplified transfer-pricing loan criterion for 2026–27

The rate replaces 4.90% for 2025–26, but the update changes an administrative safe-harbour threshold rather than Australia’s arm’s-length transfer-pricing law.^[1]

Conditions for inbound and outbound loans

For an inbound loan, an eligible Australian economic group must have a combined cross-border loan balance of A$50 million or less at all times during the financial year. Each relevant loan must be denominated and documented in Australian dollars, associated expenses must be paid in Australian dollars, and the interest rate must not exceed 5.69%. The group must also not have sustained losses or undergone a restructure during the year, and it must have assessed its compliance with the transfer-pricing rules.^[1]

The outbound option applies the same A$50 million group balance, currency, loss, restructuring and self-assessment conditions, but reverses the rate test: each qualifying outbound loan must charge at least 5.69%. Guarantees and other related-party financial transactions remain outside these loan options and require separate support.^[1]

Election and records

Companies, trusts and partnerships that meet every condition may elect to use the simplified option. PCG 2017/2 says the ATO will generally limit transfer-pricing review of covered transactions to checking eligibility, but taxpayers must keep contemporaneous records showing how they qualified. The election must be disclosed through the International Dealings Schedule, using code 7 for the relevant transaction category, or through country-by-country statements where applicable.^[1]

Using the option does not itself satisfy Subdivision 284-E of Schedule 1 to the Taxation Administration Act 1953, displace the arm’s-length rules in Subdivisions 815-B to 815-D of the Income Tax Assessment Act 1997, or validate a 5.69% related-party rate. Australian groups should retest all 2026–27 cross-border loan balances and conditions, update their eligibility memorandum and preserve their separate arm’s-length analysis before making the disclosure election.^[1][2][3]