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The AAT has set aside the Commissioner's objection decision relating to the disallowance of deductions for GIC and held that the taxpayer was entitled to deductions for the GIC accrued amounts for each year to which the GIC was referable (2003 to 2008). In so doing, the AAT rejected the Commissioner's argument that the deduction was only allowable in the year in which the GIC notices were issued (2008).

The AAT said, at para 14:

"It is clear from much of the available case law that a loss or outgoing may be incurred in one income year, even if the amount is not actually paid until a subsequent year: see W Neville and Co Ltd v FCT [1937] HCA 9; (1937) 56 CLR 290; New Zealand Flax Investments Ltd v FCT [1938] HCA 60; (1938) 61 CLR 179 and FCT v James Flood Pty Ltd [1953] HCA 65; (1953) 88 CLR 492."

And, at para 17:

"According to the statutory framework, the GIC expense is incurred at the time at which the GIC became due and payable by the operation of the relevant tax legislation. From that point, the liability is real and existing and is not merely impending, threatened or expected. It is a requirement of the relevant statute and requires no further imposition or acceptance by the [taxpayer] or the [Commissioner]..."

Nash and FCT [2012] AATA 719 (AAT; Professor Deutsch DP; 17 October 2012).


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