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Glencore Investment Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2019] FCA 1432

September 3, 2019

TAXATION – transfer pricing – appeal from objection decisions of Commissioner of Taxation – amended assessments raised pursuant to Div 13 of Income Tax Assessment Act 1936 (Cth) and Subdiv 815-A of Income Tax Assessment Act 1997 (Cth) – related party international dealing – non-arm’s length dealing for the purposes of Div 13 – for the purposes of Subdiv 815-A 

conditions operating between two enterprises in their commercial and financial relations differing from those which might be expected to operate between independent enterprises dealing wholly independently – whether consideration paid to applicant by parent company for supply of copper concentrate within arm’s length range (Div 13) – whether profits did not accrue which might have been expected to accrue but for non-arm’s length conditions (Subdiv 815-A) – contract structured as “price sharing” agreement – adjustments made by Commissioner 

based on hypothesis of market-related contract – whether permissible to restructure contract as a market-related contract for the purposes of applying transfer pricing provisions – identification of hypothetical transaction for comparative analysis – Chevron Australia Holdings Pty Ltd v Federal Commissioner of Taxation (2017) 251 FCR 40 – 1995 OECD Guidelines “Recognition of the actual transactions undertaken” – no warrant to restructure agreement – price sharing and quotational period terms in comparable transactions between independent parties – 

price sharing percentage within an arm’s length range – no discount required for quotational period optionality back pricing term – onus of proof discharged – appeal allowed

EVIDENCE – role of expert witnesses

 

Full decision here

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