The Federal Court's decision in Macquarie Finance Limited v Commissioner of Taxation [2004] FCA 1170 was handed down on 14 September 2004. Although the case turned on the Court's finding that 'interest' deductions claimed by Macquarie Finance Limited (MFL) were not deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA97), Hill J's comments on the applicability of Part IVA of the Income Tax Assessment Act 1936 (ITAA36), the general anti-avoidance provision, illustrate the difficulties taxpayers may face in seeking to avoid the broad brush of Part IVA.
The case discusses the application of the principles espoused by the High Court in Hart v Commissioner of Taxation (Hart's case) and the approach to weighting commercial purposes and tax purposes in determining the tax payer's dominant purpose in entering the relevant scheme.
