Tax Treaty Case Law around the Globe 2012

Australia: Transfer Pricing

12.1. Introduction

The edifice that is the lore of transfer pricing often seems to outsiders to lack the kinds of rigours that are associated with more traditional cross-border tax issues. It seems to be a sealed box filled with obscure contents, where practitioners speak a special dialect, communicate only with each other and use methods of analysis that are arcane and entirely fictional. There is much writing and deep theory, but it seems so abstruse and artificial that it ceases to be convincing.

Occasionally, however, transfer pricing must emerge into the real world and be tested under the scrutiny and by the standards of judges who are expecting something rigorous.

In Australia, very few transfer pricing cases have ever been litigated, and when they have, the results have not been what the tax authorities had hoped. Commissioner of Taxation v. SNF (Australia) Pty. Ltd is a prime example. The failure in Australia to produce a deep and rich body of jurisprudence on substantive transfer pricing law means that any new case will likely throw up some novel and unexpected learning.

S. 116The lesson of SNF is that when someone from outside the transfer pricing world e...