The ATO on Mon 17.9.2012, issued the following Decision Impact Statements:
- FCT v Noza Holdings Pty Ltd & Anor [2012] FCAFC 43 – In that case, the Full Federal Court unanimously confirmed the decision that the head company of an Australian group of consolidated companies was entitled to a deduction under s 25-90 of the ITAA 1997 for a dividend payment of $170m paid under a range of transactions as part of the group’s world-wide project to protect its intellectual property. In relation to the s 25-90 issues decided by the Full Court, the ATO in its Decision Impact Statement broadly said that the Commissioner considers that if an amount is not income at general law or not a “dividend” under s 6(1) of the ITAA 1936, then it will not satisfy the requirements of s 25-90 of the ITAA 1997 and no deduction will be available. Further, it also said it was open to the Full Court, on the facts of the case, to find that the dominant purpose of both the deduction for dividends and withholding tax schemes entered into was not to obtain tax benefits. Therefore, the ATO said it will review Taxation Determination TD 2009/21 (To obtain a deduction under s 25-90 of the ITAA 1997 for a cost in relation to a debt interest, does the taxpayer have to actually derive a dividend to which s 23AJ of the ITAA 1936 applies in the same income year as that in which the cost is incurred?).
[LTN 180, 17/9]
Extract from s25-90
SECTION 25-90 Deduction relating to foreign non-assessable non-exempt income
25-90 An *Australian entity can deduct an amount of loss or outgoing from its assessable income for an income year if:
(a) the amount is incurred by the entity in deriving income from a foreign source; and
(b) the income is *non-assessable non-exempt income under section 23AI, 23AJ or 23AK of the Income Tax Assessment Act 1936; and
(c) the amount is a cost in relation to a *debt interest issued by the entity that is covered by paragraph (1)(a) of the definition of debt deduction.
Note: This section does not apply to a Division 230 financial arrangement.