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ARTICLE · 13 JULY 2010

Transfer Pricing: Taxpayer wins first Substantive Transfer Pricing Case in Australia.

Cooper Grace Ward
Cooper Grace Ward
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The decision in SNF (Australia) Pty Ltd v. Commissioner of Taxation [2010] FCA 635 is good news for Australian businesses with international operations. It is the first Federal Court decision handed down on substantive transfer pricing issues. However, the case highlights the Tax Office’s hard-line approach to transfer pricing. The case also demonstrates the Tax Office’s preference to use the statistics-driven "transactional net margin method" (TNMM) to establish prices between international

AustraliaTax
Fletch Heinemann
Fletch Heinemann
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The decision in SNF (Australia) Pty Ltd v. Commissioner of Taxation [2010] FCA 635 is good news for Australian businesses with international operations. It is the first Federal Court decision handed down on substantive transfer pricing issues.

However, the case highlights the Tax Office's hard-line approach to transfer pricing. The case also demonstrates the Tax Office's preference to use the statistics-driven "transactional net margin method" (TNMM) to establish prices between international related parties.

SNF's transfer pricing issue

SNF was importing products from related companies in France, China and the United States.

The Tax Office considered SNF was paying amounts that were greater than "arms length", and therefore reducing SNF's taxable income in Australia.

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