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Broadening the concept of “comparable” for transfer pricing purposes

Published on 01 Oct 11 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

The recent decision of the Full Court of the Federal Court in FCT v SNF (Australia) Pty Ltd, in which the Australian Taxation Office was unsuccessful, is significant for taxpayers as it provides guidance as to what constitutes an arm's length price for purposes of the transfer pricing provisions of the Income Tax Assessment Act 1936. The case also explains the concept of "comparable" in the context of transfer pricing. The Full Court confirmed a comparable as something substantially like, rather than (as the Commissioner contended) as being effectively identical. Importantly, it recognises the ability to take broadly comparable data and adjust this data appropriately to give a comparable price.

This article examines the case in detail, and sets out the probable consequences for taxpayers.

Author profile:

Rebecca Bolton CTA
Rebecca is a Senior Associate with Middletons. Current at 01 April 2006 Click here to expand/collapse more articles by Rebecca BOLTON.
 
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