Full Federal Court rules in favour of PepsiCo – 28 June 2024

On 26 June 2024, the Full Federal Court handed down a 2-1 majority decision in favour of the taxpayer in PepsiCo, Inc v Commissioner of Taxation [2024] FCAFC 86. The decision overturned the November 2023 first instance decision which upheld the Commissioner’s position.

This is a significant case given the ATO focus on intangible arrangements and in as much as it provided the most authoritative judicial analysis to date of both the Diverted Profits Tax (DPT) and 2012 amendments to the Australian GAAR following an earlier series of Court decisions on Part IVA that went against the Commissioner. 

The Tax Insight provides our initial preliminary comments on the decision.