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The curious case of the consolidation counterfactual - Macquarie


In the context of assessable income, a taxpayer obtains a tax benefit in connection with a scheme if an amount is not included in the assessable income where that amount would have been included, or might reasonably be expected to have been included, in the assessable income if the scheme had not been entered into or carried out. When determining what would have happened, or might reasonably be expected to have happened, but for the scheme, it is necessary to identify what has variously been referred to as the “counterfactual” or the “alternative postulate”.

This article examines the recent decision of the Federal Court in the Macquarie Bank Limited case, in which the taxpayer successfully appealed against the Commissioner’s objection decision, and which has raised a curious counterfactual problem in the context of the consolidation provisions.

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Author Photo - Robert Allerdice CTA
Robert Allerdice CTA
Robert has tax experience spanning 33 years, and is currently The Tax Institute's Tax Consultant. In this role, Robert edits TAXVINE, The Tax Institute's weekly email newsletter, and reviews all articles for publication in two of The Tax Institute's journals, Taxation in Australia and the Tax Specialist. Robert also assists in The Tax Institute's Structured Education program, filling the roles of Advanced Tax Convenor and Applied Tax Convenor. Robert was admitted as a solicitor of the NSW Supreme Court in 1974 and practised as a tax lawyer from 1978 to 1993. He then accepted positions as Senior Lecturer, firstly with ATAX at the University of New South Wales, and then at the Law School at the University of Sydney. Robert joined The Tax Institute in June 2000. Current at 01 February 2012 Click here to expand/collapse more articles by Robert Allerdice.
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