Published on 01 Oct 04
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
The income tax and GST laws contain an array of rules that apply to debt and gains in the nature of interest. The definitions of 'debt' or 'loan' and amounts in the nature of 'interest' vary across the provisions and tax officials, taxpayers and courts must decide whether the terms should be read as applying to debt, loans or interest in a narrow legal sense or should be read more broadly to catch multi-element arrangements that give effect to a debt or loan relationship in an economic or commercial sense but not in conventional single document form. This article reviews the UK, US and Australian approaches to interpreting multi-element transactions and considers whether four tax provisions dealing with debt should be interpreted to apply to multi-element, derivative-based loan arrangements.
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Stewart is a professor in the College of Business, San Jose State University and a Visiting Fellow in the Taxation Law and Policy Research Institute, Deakin University.
Current at 20 July 2004
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