Case Note on Fletcher v FCT (1991) 22 ATR 613:

The facts of this case were that the taxpayer (and three others in partnership) entered a complex scheme, which meandering(a) the partnership, and annuity and loan arrangements. The scheme was financed through a series of round robin cheques and promised substantial bank discounts in the first fin years of the 15-year plan. A number of documents were exchanged just now no cash payments were made. This was calculated to return neutral cash flows with tenor tax deductions initially and high assessable income, especially in the last fivesome years. A feature of the scheme was that at that place was an opportunity to terminate it in the last five years. In the relevant year the partnership derived assessable income of $170,000 and claimed deductions of $360,000. The make do earlier the court was whether the taxpayers were entitled to a deduction for interest. A lot of matters were argued forrader the case reached the High Court but before the Full Court the Commissioners contention was that the interest deduction should apportioned and disallowed under s 51(1) to the extent that it exceeded the partnership income. Their honour indicated that if a taxpayers costs in deriving income were slight than the factual income, the deductions would be allowable.

However, if the costs exceed the income derived, the taxpayers design for making the expense whitethorn be relevant in characterizing and apportioning the expense for the mapping of the general deduction provision. This may include the taxpayers purpose for incur the expenditure. Manson CJ, Brennan, Deane, Dawson, Toohey, Gaudr on and McHugh JJ said (at ATR 622-3): ...The! position may, however, well be several(predicate) in the case where no relevant assessable income buns be identified or where the relevant assessable income is less than the tally of the outgoing...the disproportion between outgoing and income, the whole outgoing is in good order to... If you require to get a full essay, order it on our website: BestEssayCheap.com

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