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The new s 974‑80 – more obscure than ever


The classification for Australian tax purposes of financing arrangements involving multiple instruments or disparate parties has been problematic for at least a decade. The recent proposals to revise these provisions will change current law but not obviously improve it. One step in the legislation — the rules about when to aggregate multiple instruments— is detailed, complex and inconsistent. The second step — just how the debt and equity tests are applied where there are multiple instruments
— and the third step — what the consequences are and for whom, which are meant to follow from aggregation, are ignored. And the decision to create and rely on a new type of legislative instrument makes the endeavour even more uncertain. The article analyses the design of the new provisions and some of the questions which arise from the decision to employ a new type of legislative instrument to elucidate the basic design.

Author profile

Prof Graeme Cooper FTI
Prof. Graeme Cooper, FTI, is Professor of Taxation Law at the University of Sydney and a consultant to Greenwoods & Herbert Smith Freehills. He is a former Chair of the New South Wales State Council of The Tax Institute and former member of the National Council. He has worked as a consultant to the ATO, Treasury, Board of Taxation, United Nations, OECD, World Bank, the International Monetary Fund and several foreign governments. He was admitted to legal practice in New South Wales and Victoria, and practised commercial law and tax in Sydney before entering teaching. He has taught in law schools in Australia, Europe and the United States, and holds degrees from the University of Sydney, University of Illinois and Columbia University, New York. - Current at 31 October 2019
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