The Tax Institute welcomes the opportunity to make a submission to the Australian Taxation Office (ATO) in relation to the Decision Impact Statement - Commissioner of Taxation v Glencore Investment Pty Ltd (DIS).
The decision in Commissioner of Taxation v Glencore Investment Pty Ltd (Glencore) is of interest to taxpayers because it provides practical guidance on the approach to, and categories of, evidence they must produce to show that a transaction was on arm's length terms for the purposes of transfer pricing. Compliance with the arm's length requirement for transfer pricing purposes is a factually difficult area of the law and requires a significant investment of resources by taxpayers to ensure that they can satisfy the relevant evidentiary standards.
The Tax Institute is of the view that the Glencore case provides opportunities for the ATO to provide greater clarity on these matter in the DIS. We consider that advice or guidance by the ATO that clarifies or reduces this evidentiary burden can significantly reduce taxpayer compliance costs. It will also ensure taxpayers provide only relevant information to the ATO, thereby potentially reducing administrative resources required by the ATO to examine arm's length transactions for these purposes.