At first glance, the Federal Court decision in Messenger
Press Proprietary Limited v FCT looks like 'old news'
(forgive the pun). The events, which involved the News Corporation
group, happened in the late 1980s and early 1990s under tax rules
that have now been superseded twice – by the Div.775
forex rules in 2003 and more recently by the Div.230 TOFA rules in
2010. Nevertheless, the case contains important lessons about the
former foreign exchange rules in Division 3B of the Income Tax
Assessment Act 1936 which will have an impact on forex matters
still in dispute.
Forex has always been difficult for Courts, taxpayers and the
ATO, and the confusion continues in the case. If nothing else, this
case validates the decision to codify the treatment of foreign
exchange in the much-maligned Div.775 forex rules. Flawed as they
are, this case is convincing evidence that something needed to be
done.
