Published on 01 Jun 11
by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
The recent judgment of the Full Court of the Federal Court in the Citigroup case is important from several points of view, notably, because it is the first to consider the amendments to Pt IVA of the Income Tax Assessment Act 1936 (Cth) which included the generation of foreign tax credits as a "tax benefit" susceptible to Pt IVA. It also confirms that, when considering whether Pt IVA can apply, it will be important to point to non-tax-related commercial benefits from a transaction to ensure that contemporaneous analysis and focus are on those aspects.
This article considers the issues raised on the taxpayer's appeal, including whether a "but for" test was applied in the Federal Court, the appropriateness of a post-tax cash flow negative analysis, and whether excess foreign tax credits had been generated, and discusses the response of the court to each of those issues.