Part I: Revenue versus capital, black hole expenditure – Reconciling recent cases

Jenny Wong outlines why tax teams should familiarise themselves with recent court decisions, particularly as businesses seek to restructure, sell off or purchase assets and renegotiate contracts.

Recent court decisions in the High Court and Federal Court have reinvigorated discussion of the application of the general deductibility principles.The Court has decided in most cases expenditure incurred by the taxpayer was on capital account, and that it was not “black hole” expenditure that would have been deductible over five years under section 40-880 of the Income Tax Assessment Act 1997.The cases highlight the importance of precisely defining the character of the payment or “what is th...

Sign in below or register now to read the full article

Authors: Jenny Wong

Published Date: 09 July 2020