The High Court has ruled against hearing an Australian Tax Office appeal against Mount Isa Mines owner Glencore finding that the ATO had not raised issues sufficient to warrant a special leave in this case.
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The ruling follows a November 2020 decision by the Full Federal Court to dismiss dismissed the ATO appeal in the Glencore transfer pricing (TP) matter, except in relation to freight expenses in 2009.
A single judge of the Federal Court had earlier already found in favour of Glencore in 2019 (Glencore Investment Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia in a dispute concerning the years of 2007, 2008 and 2009.
The ATO sought to overturn findings of fact upheld by the Full Federal Court but the High Court refused to hear the matter.
"In our view, no question of principle sufficient to warrant a grant of special leave arises," Chief Justice Kiefel said.
The Federal Court of Australia ruled the ATO had misapplied TP standards in its reassessment of the taxpayer's transactions, a judgement the Full Federal Court upheld.
The ATO filed a 'request for leave to appeal' on December 10 2020 to the High Court of Australia against the Full Federal Court decision.
The Full Court also made a comment about how to conduct TP cases.
"The Court must take care not to make the task of compliance with Australia's transfer pricing laws an impossible burden when a revenue authority may, years after the controlled transaction was struck, find someone, somewhere, to disagree with a taxpayer's attempt to pay or receive arm's length consideration," the judgment said.
Analysts said the impact of the Glencore case might see the ATO moderate its approach to the TP system and how it deals with multinational groups with similar TP practices.
Following revelations from the Paradise Papers, the ATO challenged Glencore on its international structure, in which Cobar Management sold 100% of the copper concentrate produced in New South Wales to its Swiss parent company Glencore International AG,
Although the price was based on the London Metal Exchange rate, the ATO claimed this price-sharing arrangement was not in line with the arm's-length principle. Cobar Management would not have entered into such an arrangement had it been between independent parties, the tax office argued.
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