Published on 16 Apr 2008
| Took place at RACV Club, Melbourne
A number of recent cases have focused on the pivotal question of capital versus revenue. Even after so many years, the distinction between capital and revenue is still a critical issue of direct relevance to corporate taxpayers.
The Honourable Justice Pagone focused on recent key cases and their implications, and Gordon Thring of Deloitte addressed legislative amendments that change the impact of the capital revenue distinction on corporate groups.
Issues covered included:
the tax consolidation provisions, including implications for ACA push down, the application of the single entity rule in grouping activities, the implications on a disposal of shares by a head company, and the application of certain specific tax consolidation CGT events where shares held are not "capital" assets
the possible breadth of McNeil’s case and its application to other examples, including the exempt portion of capital gains distributed by trusts
the capital gains tax (CGT) provisions in relation to widely held entities, including recent ATO views in relation to the application of the provisions to listed investment companies and managed funds and the potential implications for other taxpayers
the CGT provisions in relation to applying certain rollover provisions and exemptions included only under the CGT regime
the importance of the “capital” classification of expenditure when examining the blackhole expenditure provisions.
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Justice Hill Memorial Lecture: Income and capital distinction
Author(s): Tony PAGONE QC
This paper was presented at both the 23 National Convention and the Capital versus revenue: the sun never sets event held in Victoria on 16 April 2008.
The distinction between income and capital has been the pivotal issue on which most tax issues turn since the Commonwealth imposed income tax. When capital gains tax was introduced it was anticipated that the distinction between income and capital would become less significant. To the contrary, the distinction is one gaining more and more attention. In this paper Justice Pagone focuses on recent developments in the income/capital debate including:
the reasons why the distinction remains so central to the Australian tax system
the impact of more recent judicial decisions
if the judgement has been given, the first decision relating to the debt/equity provisions.