As part of a multinational tax integrity package aimed to address the tax avoidance practices of multinational enterprises (MNEs) and improve transparency through better public reporting of MNEs’ tax information, the Australian Treasury issued a Consultation Paper in August 2022. This paper seeks to consult on the implementation of proposals to: amend Australia’s existing thin […]
Countries: Australia
2022: ATO Taxpayer Alert on Treaty shopping arrangements to obtain reduced withholding tax rates (TA 2022/2)
The ATOÂ is currently reviewing treaty shopping arrangements designed to obtain the benefit of a reduced withholding tax (WHT) rate under a double-tax agreement (DTA) in relation to royalty or dividend payments from Australia. Typically, this benefit is sought via the interposition of one or more related entities between an Australian resident and the ultimate recipient […]
Rio Tinto has agreed to pay AUS$ 1 billion to settle a dispute with Australian Taxation Office over its Singapore Marketing Hub
On 20 July 2022 Australian mining group Rio Tinto issued a press release announcing that a A$ 1 billion settlement had been reached with the Australian Taxation Office. “The agreement resolves the disagreement relating to interest on an isolated borrowing used to pay an intragroup dividend in 2015. It also separately resolves the pricing of […]
Australia vs PwC, March 2022, Federal Court of Australia, Case No FCA 278
In the course of an audit a formal request to produce certain documents was issued to the multinational meat production group JBS by the Australian tax authorities. On behalf of its client, PwC claimed that the documents requested were subject to legal professional privilege (LPP), and therefore did not need to be produced. Thus, PwC […]
Australia vs Singapore Telecom Australia Investments Pty Ltd, December 2021, Federal Court of Australia, Case No FCA 1597
Singapore Telecom Australia Investments Pty Ltd entered into a loan note issuance agreement (the LNIA) with a company (the subscriber) that was resident in Singapore. Singapore Telecom Australia and the subscriber were ultimately 100% owned by the same company. The loan notes issued totalled approximately $5.2 billion to the subscriber. The terms of the LNIA […]
ResMed Inc has entered a $381.7 million tax settlement agreement with the Australian Tax Office
ResMed – a world-leading digital health company – in an October 2021 publication of results for the first quarter of FY 2022, informs that a $381.7 million tax settlement agreement has been entered with the Australian Tax Office. The dispute concerns the years 2009 through 2018, in which the ATO alleged that ResMed should have […]
ATO and Singtel in Court over Intra-company Financing Arrangement
In 2001, Singtel, through its wholly owned Australian subsidiary, Singapore Telecom Australia Investments Pty Limited (Singtel Au), acquired the majority of the shares in Cable & Wireless Optus for $17.2 billion. The tax consequences of this acqusition was decided by the Federal Court in Cable & Wireless Australia & Pacific Holding BV (in liquiatie) v […]
Australia vs CUB Australia Holding Pty Ltd, September 2021, Federal Court of Australia, Case No FCAFC 171
In this case CUB Australia Holding Pty Ltd appeals a judicial review decision by a judge of the Federal Court. The tax authorities had issued a Notice on 4 March 2020 requesting CUB to provide certain details about documents over which CUB had claimed legal professional privilege (LPP). CUB declined to provide the requested details […]
Australia vs Glencore, May 2021, High Court, Case No [2021] HCATrans 098
Glencore Australia (CMPL) sold copper concentrate produced in Australia to its Swiss parent, Glencore International AG (GIAG). The tax authorities found, that the price paid by Glencore International AG to Glencore Australia for the copper concentrate in the relevant years according to a price sharing agreement was less than the price that might reasonably be […]
2021: ATO Draft Practical Compliance Guidelines on Intangibles Arrangements, PCG 2021/D4
The Australian Taxation Office (ATO) has issued draft Compliance Guidelines on intangible arrangements, PCG 2021/D4. These Guidelines will (when finalised)Â set out the ATO’s compliance approach to international arrangements connected with the development, enhancement, maintenance, protection and exploitation of intangible assets, specifically, the potential application of the transfer pricing, general anti-avoidance rule (GAAR) and the […]
Australia vs Glencore, November 2020, Full Federal Court of Australia, Case No FCAFC 187
Glencore Australia (CMPL) sold copper concentrate produced in Australia to its Swiss parent, Glencore International AG (GIAG). The tax administration found, that the price paid by Glencore International AG to Glencore Australia for the copper concentrate in the relevant years according to a price sharing agreement was less than the price that might reasonably be […]
Mining Group Rio Tinto in new $86 million Dispute with ATO over pricing of Aluminium
In March 2020 the Australian Taxation Office issued an tax assessment regarding transfer pricing to Rio Tinto’s aluminium division according to which additional taxes in an amount of $86.1 million must be paid for fiscal years 2010 – 2016. According to the assessment Rio’s Australian subsidiaries did not charge an arm’s length price for the […]
Australia vs BHP Biliton Limited, March 2020, HIGH COURT OF AUSTRALIA, Case No [2020] HCA 5
BHP Billiton Ltd, an Australian resident taxpayer, is part of a dual-listed company arrangement (“the DLC Arrangement”) with BHP Billiton Plc (“Plc”). BHP Billiton Marketing AG is a Swiss trading hub in the group which, during the relevant years, was a controlled foreign company (CFC) of BHP Billiton Ltd because BHP Billiton Ltd indirectly held […]
Google – Taxes and Transfer Pricing
Google’s tax affairs are back in the spotlight after filings in the Netherlands have showed that billions of dollars were moved to Bermuda in 2016 using the “double Irish Dutch sandwich”. According to the Washington Post, Google’s cash transfers to Bermuda reached $27b in 2016. Google uses the double Irish Dutch sandwich structure to shield […]
Australia vs Glencore, September 2019, Federal Court of Australia, Case No FCA 1432
Glencore Australia (CMPL) sold copper concentrate produced in Australia to its Swiss parent, Glencore International AG (GIAG). The tax administration found, that the price paid by Glencore International AG to Glencore Australia for the copper concentrate in the relevant years according to a price sharing agreement was less than the price that might reasonably be […]
Australia vs. Glencore, August 2019, High Court, Case No. [2019] HCA 26 S256/2018
The Australian Tax Office had obtained information from the Paradise Paper-leak and used the information in a tax assessment of Glencore. Glencore held that such leaked information was confidential (protected by legal professional privilege) and could not be used in a tax assessment. On that basis Glencore filed an appeal to the High Court. High […]
The Australian Taxation Office and Mining Giant BHP have settled yet another Transfer Pricing Dispute
BHP Group has agreed to pay the state of Western Australia A$250 million to end a dispute over royalties paid on iron ore shipments sold through its Singapore marketing hub. The State government found in January that the world’s biggest miner had underpaid royalties on iron ore shipments sold via Singapore stretching back over more […]
The Australian Taxation Office and Bupa Health Insurance reaches $157m settlement after decade-long dispute
Bupa reaches $157m settlement with the Australian tax office after decade-long dispute The settlement was the result of a decade-long dispute with the ATO over a “number of different mattersâ€, included transfer pricing issues with acquisitions in Australia in 2007 and 2008. Bupa’s tax affairs came under scrutiny last year in a report by the […]
Australia vs BHP Billiton, January 2019, Federal Court of Australia, Case No [2019] FCAFC 4
Mining group BHP Billiton had not in it’s Australian CfC income included income from associated British group companies from sales of Australian goods through Singapore. The tax authorities held that the British companies in BHP’s dual-listed company structure fell within a definition of “associate”, and part of the income should therfore be taxed in Australia […]
2018: ATO Taxpayer Alert on Mischaracterisation of activities or payments in connection with intangible assets (TA 2018/2)
The ATO is currently reviewing international arrangements that mischaracterise intangible assets[1] and/or activities or conditions connected with intangible assets. The concerns include whether intangible assets have been appropriately recognised for Australian tax purposes and whether Australian royalty withholding tax obligations have been met. Arrangements that allocate all consideration to tangible goods and/or services, arrangements that allocate […]
The Australian Taxation Office and Mining Giant BHP have settled an ongoing Transfer Pricing Dispute
The Australian Taxation Office has agreed on a settlement with BHP Mining Group to resolve a transfer pricing dispute relating to transfer pricing treatment of commodities sold to a Singapore marketing hub. BHP had originally been assessed with over AUD 1 billion in additional taxes. According to the settlement BHP will pay additional tax of […]
Australia vs Satyam Computer Services Limited, October 2018, Federal Court of Australia, Case No FCAFC 172
The question in this case was whether payments received by Satyam Computer Services Limited (now Tech Mahindra Ltd) from its Australian clients –Â that were royalties for the purposes of Article 12 of the tax treaty with India, but not otherwise royalties under Australian tax law –Â were deemed to be Australian source income by reason of […]
Marketing and Procurement Hubs – Tax Avoidance
The Australian Taxation Office has issued new guidance for multinational groups using offshore marketing- and procurment hubs for tax avoidance purposes. The guidance adresses tax schemes where MNEs uses offshore hubs to shift profits and thereby avoid Australian taxes. Offshore hub arrangements are catagorised by the ATO as white, green, blue, yellow, amber, or red […]
Tax avoidance in Australia
In May 2018 the final report on corporate tax avoidance in Australia was published by the Australian Senate. The report contains the findings, conclusions and recommendations based on 4 years of hearings and investigations into tax avoidance practices by multinationals in Australia.
Australian Parliament Hearings – Tax Avoidance
In a public hearing held 22 August 2017 in Sydney Australia by the Economics References Committee, tech companies IBM, Microsoft, and Apple were called to the witnesses stand to explain about tax avoidance schemes – use of “regional headquarters” in low tax jurisdictions (Singapore, Ireland and the Netherlands) to avoid or reduce taxes. Follow the […]
Australia vs Chevron, 21 April 2017, Federal Court 2017 FCAFC 62
This case was about a cross border financing arrangement used by Chevron Australia to reduce it’s taxes – a round robin. Chevron Australia had set up a company in the US, Chevron Texaco Funding Corporation, which borrowed money in US dollars at an interest rate of 1.2% and then made an Australian dollar loan at 8.9% to the […]
Australia vs Rio Tinto and BHP Billiton, April 2017 – Going to Court
Singapore marketing hubs are being used by large multinational companies — and billions of dollars in related-party transactions that are being funnelled through the hubs each year. The Australian Tax Office has issued claims of substantial unpaid taxes to mining giants Rio Tinto and BHP Billiton. BHP Billiton and Rio Tinto have revealed through the […]
Australia vs. Tech Mahindra Limited, September 2016, Federal Court, Case no. 2016 ATC 20-582
This case is about the interpretation of Article 7 (the business profits rule) and Article 12 (the royalties provision) of the Agreement between the Government of Australia and the Government of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The issue was misuse of the provision in […]
Australia vs. Orica Limited, December 2015 Federal Court, FCA 1399; 2015 ATC 20-547.
The Orica case involve funding of an overseas entity or operations by an Australian entity, where the funds are subsequently provided back to the Australian entity or its Australian associate in a manner which purportedly generates Australian tax deductions while not generating corresponding Australian assessable income (Free dip). The arrangements essentially involve the “round robin” […]
Australia vs. Chevron Australia Holdings Pty Ltd . October 2015, Federal Court of Australia, case No. 3 and 4
The Australien Chevron case was about a $US 2.5 billion intercompany loan between Chevron Australia and its US subsidiary, Chevron Texaco, and whether the interest paid on the loan by Chevron Australia exceeded the arm’s length price. Chevron Australia had set up a company in the US, Chevron Texaco Funding Corporation, which borrowed money in US dollars at an […]
Australia vs SNF, June 2011
SNF was a member of a global group with headquarters in France. SNF bought polyacrylamides from group companies overseas, and sold them to unrelated end-users in various industries in Australia. From its incorporation in 1990 until 2004, SNF consistently returned tax losses. SNF was subject to a transfer pricing audit. Determinations were made under Division […]
Australia vs. Roche July 2008, Administrative Appeals Tribunal NT 2005/7 & 56-65
The Applicant is an Australian subsidiary of the Roche Group, the parent company of which is a resident of Switzerland. Roche is a major pharmaceutical corporation with integrated operations in many countries. It carries on research and development, manufacturing, marketing, selling and distribution of pharmaceuticals, vitamins, chemicals, diagnostic and other products. During the 1993 to […]
Australia vs San Remo Macaroni Co , August 1980, FEDERAL COURT OF AUSTRALIA, Case No. [1999] FCA 1468
This case is about an Australian distributor of pasta – San Remo Macaroni Co – which imported pasta products from an independent manufacturer in Italy. In 1985 a Swiss company – Bigalle – was established by the Australian distributor which going forward purchased the pasta from the independent manufacturer in Italy and resold it to […]
Australia vs Estee Lauder, July 1991, Federal Court of Australia, Case No [1991] FCA 359
An Australian subsidiary of Estee Lauder paid a licence fees to licensor on sales of cosmetics in Australia whether imported or made locally. At issue is whether this fees should be taken into account in determining price and thus “transaction value” of goods for purposes of assessing customs duty. Judgement of the Federal Court The […]
Australia vs Commonwealth Aluminium Corporation Ltd, August 1980, HIGH COURT OF AUSTRALIA, Case No. HCA 28
This case is about the tax authorities power to determine a taxable income according to section 136 of the Australian Income Tax Assessment Act 1936 (Cth) which provides: “Where any business carried on in Australia – (a) is controlled principally by non-residents; (b) is carried on by a company a majority of the shares in […]