The Australian Taxation Office, in a September 28 decision impact statement, sets out its views on the outcome of the Glencore transfer pricing dispute, in which the Federal Court of Australia held that the ATO had misapplied transfer pricing provisions. Australia’s High Court in May refused to hear the government’s appeal, allowing the Federal Court decision to stand.
The ATO’s statement announces that it “does not accept that this case narrows the extent by which a comparable hypothesis is to be personalised, nor that it sets a standard for ‘depersonalisation’.” In determining arm’s length consideration, the Federal Court decision had set forth several propositions that it considered relevant in deciding the appropriate degree of “depersonalization” (borrowing the term from a Chief Justice decision in Chevron).
Establishing the arm’s length consideration or the arm’s length conditions that might reasonably be expected to operate in any given case, the ATO states, will always require a careful examination of the totality of the evidence available. This might include “evidence about all of the relevant objective circumstances of the actual parties in the actual market at the relevant time.”
The statement adds that the ATO might not consider reliance on an expert opinion as to what independent parties in the same industry might reasonably have been expected to have done as sufficient to discharge the taxpayer’s onus of proof. Although such evidence was accepted in the Glencore case, the ATO states that “evidence about the Glencore group’s policies or its risk appetite might also have been relevant had it been before the Court.”
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