Taxation Determination TD 92/178







[Note: This is a consolidated version of this document. Refer to the Tax Office Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.]: Section 8-1 of the Income Tax Assessment Act 1997, to which this Ruling refers, expresses the same idea as subsection 51(1) of the Income Tax Assessment Act 1936. | 1. No. The essential character of the outgoing under consideration is capital, or of a capital nature, as it formed part of a once only, non-recurrent, payment for the acquisition of shares by Company A which held them as non-trading, non-revenue, assets ( Sun Newspapers Ltd v FC of T (1938) 61 CLR 337). | 2. Also, the outgoing cannot be regarded as interest as there was no loan or debt in existence between Company A and Company B during the currency of the underwriting agreement. Interest can only be ascertained by reference to an obligation to pay a sum of principal moneys, and without that relationship an outgoing cannot be treated as interest ( Reference Re Saskatchewan Farm Security Act [1947] SCR 394 at 411-412; Federal Wharf Co. Ltd v DFC of T (1930) 44 CLR 24 at 27-28). | Note: The Addendum to this Determination that issued on 2 September 1998 amends this Determination in relation to the 1997-98 or later income years. | Commissioner of Taxation 29/10/92 | Previously issued as Draft TD 92/D139


Legislative references: ITAA 51(1) ITAA 1997 8-1
Case references: Sun Newspapers Ltd v FC of T (1938) 61 CLR 337
Subject references: deductibility of an amount paid under an underwriting agreement; interest expense