TalkTax

In recent times, we have seen several tax cases being lost by Taxpayers. Analysing the judgments, I believe we have seen a fundamental move when dealing with tax avoidance – a move back towards statutory interpretation. The Newton and Elmiger cases are the policy basis for our anti-avoidance rule as they focus on statutory interpretation and I believe the courts are showing a move back to this ordinary approach (as can be seen in the Banks cases).

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The appeal in Penny and Hooper has been decided in favour of the Commissioner in a 2:1 majority decision of the Court of Appeal released on 4 June 2010.

In the first instance the decision could be considered to have been rendered largely nugatory for the time being given the recent reduction of the top marginal rate to that of the trustee rate. However, with the new company rate now significantly below these rates, the matter of below market salaries will likely be a live issue for some time.

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Mortgage “break fees” or “penalty interest” is a cost that has become more common place in the current economic times. With the recession starting to bite and with some taxpayers owing large sums to the banks on fixed loans with comparatively high interest rates, decisions about breaking the fixed-rate term to get lower rates have to be made. Invariably decisions like this come with a cost as banks want to be compensated for the loss of revenue that they would have received relative to the higher interest rate.

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