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The application of Pt IVA to stapled structures


The ATO released TA 2017/1 on the re-characterisation of income from trading businesses in 2017. This article examines some of the issues raised in TA 2017/1, and whether Pt IVA of the Income Tax Assessment Act 1936 (Cth) might apply to arrangements which are said by the Commissioner to involve an artificial fragmentation of an integrated trading business in order to re-characterise trading income into more favourably taxed passive income. This article will also examine recent moves by the Commissioner to apply Pt IVA to upstream investment structures that utilise a mix of debt and equity. The authors conclude that, while the application of Pt IVA will always depend on the particular facts and circumstances of a given case, the mere fact that an infrastructure investment is acquired and held within a stapled structure will be insufficient to attract the operation of Pt IVA.


Author profiles

Gregory Davies CTA
Greg Davies QC, CTA, practises principally in taxation and revenue law, administrative law, commercial law, corporations law and equity and trusts. He has appeared in many long and complex matters in the Federal Court at trial and appellate levels as well as in the High Court. Greg appeared in the following High Court cases: ElecNet (Aust) Pty Ltd v FCT, FCT v Sun Alliance Investments Pty Ltd, FCT v McNeil, FCT v Scully and FCT v Consolidated Press Holdings Ltd. He also appeared in leading Part IVA cases in the Full Federal Court, including AXA Asia Pacific Holdings Ltd v FCT, FCT v Lenzo, FCT v Ashwick, Puzey v FCT, FCT v Star City Ltd, Spassked Pty Ltd v FCT, Cumins v FCT, Pridecraft Pty Ltd v FCT and Eastern Nitrogen Ltd v FCT. - Current at 31 October 2019
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Eugene Wheelahan QC FTI
Eugene is a barrister who practises principally in the area of tax. He has appeared in a number of leading tax cases in the High Court and Federal Court, including BHP (the “associates” case), Watson, AusNet, Orica, SPI PowerNet, Australian Pipeline Trust and Financial Synergy Holdings. He also provides opinions and assists clients in their dealings with the Commissioner. Eugene has a Master of Tax from the University of Melbourne where he is a Senior Fellow of the Law Faculty, lecturing in the subjects Comparative Tax Avoidance and Tax Avoidance and Planning. - Current at 19 June 2019
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