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The market based capital revenue boundary and income tax payments

Published on 01 Dec 08 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

The marketplace provides notions of capital and revenue that contrast with the tests applied in the tax world for distinguishing between them. This paper examines the market based criteria and points to their advantages in determining the troublesome capital-revenue boundary. The criteria are applied to income tax payments, which are classified as on revenue account. The paper considers the accepted wisdom that tax payments cannot be deductible and raises questions about the validity of certain assumptions underlying that view; first, that deductibility of tax payments contravenes the principle that determination of the tax base must be anterior to the fixing of the tax liability and second, that deductibility would be impractical on mathematical grounds.

Author profiles:

Bill BUTCHER
Bill Butcher is a Senior Lecturer in the School of Business Law and Taxation, University of New South Wales.
Current at November 2008
Click here to expand/collapse more articles by Bill BUTCHER.
 
Ewan McCANN
Ewan McCann is a Taxation Economics Consultant. Latterly Principal Economist, Policy Advice Division, Inland Revenue Department, New Zealand.
Current at November 2008
Click here to expand/collapse more articles by Ewan McCANN.
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