The Federal Court delivered Glencore a significant win against the Commissioner of Taxation.
The Federal Court has delivered Glencore Investment Pty Ltd (Glencore) a significant win against the Commissioner of Taxation (Commissioner) in relation to the transfer prices it used on certain cross-border related party transactions associated with its Cobar copper mining operations.
The decision in Glencore Investment Pty Ltd v Commissioner of Taxation  FCA 1432, delivered on 3 September 2019, has implications for taxpayers, notably being the first transfer pricing case in Australia following the Full Federal Court’s decision in Chevron Australia Holdings Pty Ltd v Commissioner of Taxation  FCAFC 62 (Chevron).
We understand that the Commissioner filed an appeal against the decision on 1 October 2019.
In summary, Justice Jennifer Davies held that:
a) Glencore had discharged the onus of proof that the amended assessments raised by the Commissioner under Division 13 and Subdivision 815-A were excessive.
b) The Commissioner’s primary case was rejected on the basis that the Commissioner had misapplied Division 13 and Subdivision 815-A.
c) On the evidence, the consideration that Glencore was paid for its copper concentrate in the relevant years was within an arm’s length range.
The Federal Court in Glencore applied the principles established by the Full Federal Court in Chevron and Commissioner of Taxation v SNF (Australia) Pty Ltd  FCAFC 74 (SNF):
The Glencore case provides important insights into the approach the courts are likely to take when examining transfer pricing matters under Division 13 and/or Subdivision 815-A, for example:
Glencore reinforces that evidence is key and taxpayers should direct their attention to gathering a combination of evidence:
We explore these matters in more detail in the PDF.
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