Question

SNF (Australia) Pty Ltd v FC of T (2011) 193 FCR 149

Answer 1

The case concerned whether the taxpayer paid more than the arm's length price for products acquired from overseas related parties so that the Commissioner could apply the transfer pricing rules to adjust the purchase price for income tax purposes.

Brief summary of facts

The taxpayer was a member of a global group whose headquarters are in France. The taxpayer bought certain chemicals from group companies overseas, and sold them to unrelated end-users in various industries in Australia. From its incorporation in 1990 until 2004, the taxpayer consistently returned tax losses.

The taxpayer was subject to a transfer pricing audit. Determinations were made under Division 13 of Part III of the Income Tax Assessment Act 1936 to adjust the consideration for the company's international related party transactions to reflect an arm's length amount. For the income years from 1997 to 2003, the Commissioner made determinations under ss136AD(3) and (4) of the Act as to the arm's length price of the chemicals.

The Commissioner issued notices of assessment in 2007, and subsequently disallowed the taxpayer's objections to those assessments.

The taxpayer produced evidence of sales by the overseas suppliers to third party purchasers, which it submitted established comparable uncontrolled prices (CUP) that were as high as or higher than the prices paid by the taxpaye