The Full Federal Court decision in the Glencore Case raises very important questions in relation to core concepts underlying Australia’s previous and current transfer pricing rules. The case involves the pricing structure that an Australian mining company used for the copper concentrate it sold to its Swiss parent, the largest global trader in copper concentrate. Broadly speaking, the price for copper concentrate is worked out by deducting selecting a copper reference price from a listed metals exchange, like the London Metals Exchange, and deducting an allowance for treatment and copper refining costs (TCRCs). This was the main issue in the case. There were two options realistically available to the taxpayer: the use of market benchmarks that took account of both the prices set by the major mills and those set by the spot market; and, another method known as price sharing where the TCRCs are set at a fixed percentage of the copper reference price, which had the effect of protecting the seller from the risk that copper prices and TCRCs may trend in different directions. In February 2007 when the taxpayer switched to a price sharing formula that set the TCRC rate at 23% of the copper reference price, the benchmark rate set by the Japanese mills was much lower, and the TCRC rate established for the purposes of the mining company’s budget, which was approved by its parent around August to September 2006, was 6.5% of the copper reference price. The Appeal Court accepted the taxpayer’s argument that the 23% was an arm’s length rate because there were contracts between independent parties that used price sharing, and 23% was the midpoint of the rates in those cases, and because the taxpayer’s expert witness testified that for such a high cost mine price sharing was “a conservative and reasonable approach to minimising risk”. The Court did not consider how independent parties dealing at arm’s length (or wholly independently) with each other would have gone about deciding whether or not to hedge the risk, or the comparative benefits of market benchmark pricing relative to price sharing. A question therefore arises as to whether the Appeal Court correctly applied the statutory tests, a matter that would benefit from a High Court review.