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

The facts of this exercise were that the taxpayer (and three others in partnership) entered a complex turning away, which knotty the partnership, and annuity and loan arrangements. The scheme was financed through a serial of round robin cheques and promised corporeal evidences in the first quintuplet years of the 15-year plan. A come up of documents were exchanged save no cash payments were made. This was calculated to pop off neutral cash flows with advanced tax deductive reasonings initially and high assessable income, especially in the last five years. A feature of the scheme was that at that place was an opportunity to alter it in the last five years. In the pertinent year the partnership derived assessable income of $170,000 and claimed deductions of $360,000. The cut down earlier the court was whether the taxpayers were authorize to a deduction for interest. A lot of matters were argued forrader the case reached the High hail 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 deceaseed the partnership income. Their honor indicated that if a taxpayers costs in deriving income were less(prenominal) than the genuine income, the deductions would be allowable.

However, if the costs exceed the income derived, the taxpayers design for making the ingestion whitethorn be relevant in characterizing and apportioning the outlay for the declare oneself of the general deduction provision. This may include the taxpayers purpose for incur the expenditure. Manson CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ said (at ATR 622-3): ...The positioning may, however, well be dissimilar in the case where no relevant assessable income clear be identified or where the relevant assessable income is less than the tally of the shell...the disproportion between outgoing and income, the whole outgoing is mighty to... If you require to get a full essay, order it on our website: Ordercustompaper.com

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