Tag: Cross-border financing arrangements

Australia vs Chevron, 21 April 2017, Federal Court 2017 FCAFC 62

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 Australian parent company. The loan increased Chevron Australia’s costs and reduced taxable profits. The interest payments, which was not taxed in the US, came back to Australia in the form of tax free dividends. The US company was just a shell created for the sole purpose of raising funds in the commercial paper market and then lending those funds to the Australian company. Australian Courts ruled in favor of the tax administration and the case was since appealed by Chevron. In April 2017 the Federal Court decided to dismiss Chevron’s appeal. Australia vs Chevron 2017 Federal Court, 2017 FCAFC 62 Following the decision from the Federal Court Chevron Australia issued an appeal to the High ... Continue to full case