The 2015 OECD review of its transfer pricing guidance was in part focussed on the need to align transfer pricing outcomes with value creation, a process that was based on open market benchmarking and an examination of the economic functions performed, assets used and risks assumed by the parties. In broad terms this can be described as a further elaboration of “the arm’s length principle”, which the paper explores and contrasts with global formulary apportionment which some still advocate as the preferred approach to the taxation of multinational enterprises. The approach of Australian courts, evident in the High Court decisions in Nathan’s Case and the United Aircraft Corporation Case has been to determine the source of income on the basis of a legal analysis of the facts and circumstances of each individual case, a process that gave significant weight to the legal arrangements put in place between the parties and gave little if any weight to economic and accounting analysis. This paper explores the impacts of these different approaches and the implications they have for the taxation aspects of trade and investment relations between Australia and its tax treaty partners. In particular the paper explores their implications in terms of providing workable certainty to support those relations and the taxation rules that apply to them. The paper also discusses the application of Australia’s transfer pricing rules as articulated in Subdivision 815-B of the Income Tax Assessment Act 1997 and Article 9 of Australia’s double taxation agreements, the relationship between them, and whether they achieve the necessary workable certainty.