Australia vs Glencore, May 2021, High Court, Case No [2021] HCATrans 098

Category: Burden of Proof, Commodity Transactions, Sales and Marketing Hubs | Tag: , , , , , , ,
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Glencore Australia (CMPL) sold copper concentrate produced in Australia to its Swiss parent, Glencore International AG (GIAG).

The tax authorities found, that the price paid by Glencore International AG to Glencore Australia for the copper concentrate in the relevant years according to a price sharing agreement was less than the price that might reasonably be expected to have been paid in an arm’s length dealing between independent parties.

The tax assessment was brought to court by Glencore.

The Federal Court of Australia found in favor of Glencore.

The ruling of the Federal Court was appealed by the Australian tax authorities.

On 6 November 2020, a Full Federal Court in a 3-0 ruling dismissed the appeal of the tax authorities.

The tax authorities then submitted a application for special leave to the High Court.

This application was dismissed by the Court in a judgement issued 20. May 2021.

 

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Australia vs Glencore 2021





Related Guidelines

  1. TPG2022 Chapter II paragraph 2.19Under the CUP method, the arm’s length price for commodity transactions may be determined by reference to comparable uncontrolled transactions and by reference to comparable uncontrolled arrangements represented by the quoted price. Quoted commodity prices generally reflect the agreement between independent buyers and...
  2. TPG2022 Chapter II paragraph 2.26As another example, assume a taxpayer sells 1000 tons of a product for $80 per ton to an associated enterprise in its MNE group, and at the same time sells 500 tons of the same product for $100 per ton to an independent...
  3. TPG2022 Chapter II paragraph 2.20For the CUP method to be reliably applied to commodity transactions, the economically relevant characteristics of the controlled transaction and the uncontrolled transactions or the uncontrolled arrangements represented by the quoted price need to be comparable. For commodities, the economically relevant characteristics include,...
  4. TPG2022 Chapter II paragraph 2.21In order to assist tax administrations in conducting an informed examination of the taxpayer’s transfer pricing practices, taxpayers should provide reliable evidence and document, as part of their transfer pricing documentation, the price-setting policy for commodity transactions, the information needed to justify price...
  5. TPG2022 Chapter II paragraph 2.22A particularly relevant factor for commodity transactions determined by reference to the quoted price is the pricing date, which refers to the specific time, date or time period (e.g. a specified range of dates over which an average price is determined) selected by...
  6. TPG2022 Chapter II paragraph 2.18Subject to the guidance in paragraph 2.2 for selecting the most appropriate transfer pricing method in the circumstances of a particular case, the CUP method would generally be an appropriate transfer pricing method for establishing the arm’s length price for the transfer of...
  7. TPG2022 Chapter II paragraph 2.25One illustrative case where adjustments may be required is where the circumstances surrounding controlled and uncontrolled sales are identical, except for the fact that the controlled sales price is a delivered price and the uncontrolled sales are made f.o.b. factory. The differences in...
  1. A Toolkit on Implementation of Effective Transfer Pricing Documentation RequirementsThe Platform for Collaboration on Tax (IMF, OECD, UN and the WBG) has published a toolkit on implementation of effective transfer pricing documentation requirements.  ...
  2. Report on the attribution of income to permanent establishments 1994The 1994 OECD report on issues related to the attribution of income to permanent establishments, was made available to the public by decision of the OECD Council on 26 November 1993. The report examines the circumstances under which income is to be attributed...

Related Case Law

  1. Australia vs Glencore, November 2020, Full Federal Court of Australia, Case No FCAFC 187Glencore Australia (CMPL) sold copper concentrate produced in Australia to its Swiss parent, Glencore International AG (GIAG). The tax administration found, that the price paid by Glencore International AG to Glencore Australia for the copper concentrate in the relevant years according to a...
  2. Ukrain vs PJSC “Azot”, March 2019, Administrative Court of Appeal, Case No 826/17841/17Azot is a producer of mineral fertilizers and one of the largest industrial groups in Ukraine. Following an audit the tax authorities concluded that Azot’s export of mineral fertilizers to a related party in Switzerland, NF Trading AG, had been priced significantly below...
  3. Australia vs Glencore, September 2019, Federal Court of Australia, Case No FCA 1432Glencore Australia (CMPL) sold copper concentrate produced in Australia to its Swiss parent, Glencore International AG (GIAG). The tax administration found, that the price paid by Glencore International AG to Glencore Australia for the copper concentrate in the relevant years according to a...
  4. Ukrain vs PJSP Gals-K, July 2021, Supreme Administrative Court, Case No 620/1767/19Ukrainian company “PJSP Gals-K” had been involved in various controlled transactions – complex technological drilling services; sale of crude oil; transfer of fixed assets etc. The tax authority found, that prices had not been determined in accordance with the arm’s length principle and...