Published on 01 Aug 11
by "THE TAX SPECIALIST" JOURNAL ARTICLE
The two principal issues in the AXA Asia Pacific Holdings Limited case were, broadly, whether AXA dealt "at arm's length" with an investment bank in respect of a sale of shares to a non-wholly owned subsidiary of the bank, and whether the omission from AXA's assessable income of an amount equal to the resulting capital gain constituted a "tax benefit" within the meaning of Pt IVA of the Income Tax Assessment Act 1936. The taxpayer was successful on both points at first instance in the Federal Court and on appeal, and the High Court declined to hear a further appeal.
Part 1 of this article, which was published in the June 2011 issue of this journal, examined the facts of the case, and discussed whether the dealings were "at arm's length" and whether a "tax benefit" was obtained by AXA. Part 2, published here, discusses the High Court special leave proceedings, and examines in detail the potential for application of s 177D.
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