AQQ v Comptroller of Income Tax

This case involved a complicated financing arrangement in which AQQ unsuccessfully sought to deduct interest expenses incurred on notes against franked dividends received.

There are a number of learning points from this case:

1. Ensure documentary evidence for the commercial reasoning behind the transaction
2. Ensure that there is a reasonable basis for the amount of consideration/valuation of assets etc.
3. Be aware that if you arrange the transaction just to coincide with say the commencement dates of the relevant tax change, there is a greater risk that the transaction will be seen to be a tax avoidance scheme
4. Take note that the Board of Review found that the case law on anti-avoidance in Australia and New Zealand was similar to Singapore’s laws on anti-avoidance. So ultimately it boils down to an interpretation of section 33 Income Tax Act.