The deductibility of interest, Forrest's case and hybrid trusts
Source: The Tax Specialist Journal Article
Published Date: 1 Oct 2011
"Hybrid trusts" are trusts where the interests of beneficiaries include both fixed and discretionary entitlements to income or capital or both. They have become a popular medium for structuring investments. The Commissioner of Taxation has published TD 2009/17, in which he expressed his views on the deductibility of interest on funds borrowed to invest in hybrid trusts. The 2010 decision of the Full Court of the Federal Court in Forrest v FCT, however, arguably casts some doubt on the correctness of the Commissioner's approach. In this article, the author examines issues regarding the deductibility of interest relating to investments in hybrid trusts and the implications of the decision in the Forrest case.
The author concludes that the Commissioner's view, expressed in TD 2009/17 and his decision impact statement on Forrest, that an apportionment of the interest deduction is required in all cases is unlikely to be accepted by a court.
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Already a Subscriber? Login now
Details
- Published By: Bradley L Jones CTA
- Published On:1 Oct 2011
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.
Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
Copyright Statement
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags
Share this page