The Full Federal Court today issued a decision for the Commissioner of Taxation in a case concerning transfer prices used with respect to certain cross-border related-party loans. The decision has implications not only for taxpayers with cross-border related-party financial dealings, but also for taxpayers with other “broader” cross-border related-party dealings.
The case is: Chevron Australia Holdings Pty Ltd (CAHPL) v. Commissioner of Taxation  FCAFC 62 (21 April 2017).
The case concerns the transfer pricing implications of an intercompany loan agreement between the taxpayer and its U.S. subsidiary (CFC) and whether the interest paid by the taxpayer to the CFC exceeded an arm’s length price for the borrowing. A lower court decision (2015) found that the taxpayer had not “discharged the onus of proof” that the amended assessments raised by the Commissioner were excessive. An appeal was made to the Full Federal Court, which issued its decision today.
What’s next? It is not yet known if the taxpayer will file a Special Leave Application with the High Court of Australia.
Read an April 2017 report [PDF 91 KB] prepared by the KPMG member firm in Australia
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.