Although PTTEP Australasia (Ashmore Cartier) Pty Ltd v Commissioner of Taxation  FCAFC 71 concerns Petroleum Resource Rent Tax (PRRT), the decision could also bear on what arrangements, objectively, are seen to be entered into to raise finance.
Here, the cash flows under a long-term contract for the supply of crude oil were adjusted to allow for the time value of money where the seller benefited economically from payments in advance of supply.
The Full Federal Court of Australia concluded that, as a matter of construction, it was the adjusted amount that was the bargained price stating that “...It was conceptually no different from the parties agreeing to accept an amount if paid in advance for a different amount if paid on the date of transfer”. In reaching this conclusion, the Court dismissed the Commissioner’s contention that the adjustment mechanism introduced a financing arrangement between the buyer and seller.
If correct, the decision would seem to have implications for a number of arrangements which might previously have been thought to give rise to a 'financing arrangement' for Division 974 purposes. In turn, the requirement to withhold from payments to non-residents and the classification of liabilities for thin capitalisation purposes could also fall for reconsideration.