Federal Court Agrees with Glencore That Prices for Copper Concentrate Were Arm’s Length

In Glencore Investment Pty Ltd v. Commissioner of Taxation, Davies J has confirmed that the prices received by the taxpayer, on the sale of copper concentrate to its Swiss parent, were “arm’s length”. The decision demonstrates the difficulties and uncertainties associated with litigating transfer pricing cases that face taxpayers and the Commissioner alike. It confirms that transfer pricing, at least in Australia, is not simply a matter of economic analysis and pointing to an arm’s length result. Instead, determining the correct price requires a careful consideration of the statutory tests and a determination of whether the “amount of profits” that have accrued to a taxpayer, differ from the amount of profits that would have accrued, if arm’s length conditions had operated.