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Decision on stapled debt shows divided Federal Court.

Publication date: 03 Oct 05 | Source: TAX NOTES INTERNATIONAL

Issue: Vol. 40 vol. 1 2005

Pages: pp. 17-20


A majority of Australia's Federal Court in Macquarie Finance Ltd. v. Commissioner of Taxation [2005] FCAFC 205 (Sept. 16, 2005) upheld the decision at first instance that interest payable on notes issued by one company and stapled to preference shares issued by another company was not deductible under the Income Tax Assessment Act 1997.

The decision is one of the more perplexing to come out of the Full Federal Court recently: the three Appeal Court Judges reached their opinions for different reasons, their reasons do not sit easily with the reasons given at the first instance, and some of their reasons are more than a little unexpected. The case shows a Full Federal Court almost evenly divided on issues of fundamental principle.

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Author profile

Prof Graeme Cooper FTI
Graeme is Professor of Taxation Law at The University of Sydney and a consultant to Greenwoods & Herbert Smith Freehills. He is a former Chair of the New South Wales State Council of The Tax Institute and former member of the National Council. He has worked as a consultant to the ATO, Treasury, Board of Taxation, United Nations, OECD, World Bank, the International Monetary Fund and several foreign governments. He was admitted to legal practice in New South Wales and Victoria, and practised commercial law and tax in Sydney before entering teaching. He has taught in law schools in Australia, Europe and the United States, and holds degrees from the University of Sydney, University of Illinois and Columbia University, New York. - Current at 26 June 2019
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