This paper examines the High Court's landmark decision in Spotless, extrapolates principles from that decision, and applies them in searching for the real source of interest income derived from a tax avoidance scheme. It argues that the Full Court of the Federal Court was wrong in applying a form over substance approach in determining the source of interest income. The paper also focuses on the High Court's "foster and protect" doctrine, that tax laws should be applied and understood to recognise that the commercial environment is as important to a taxpayer as the economic reality of taxes. The doctrine will help to create a more flexible and effective tax system, and prevent a dangerous loss of faith in the system.
"Spotless : A Lesson in Form and Substance but not in Substance over Form,"
Revenue Law Journal:
1, Article 8.
Available at: http://epublications.bond.edu.au/rlj/vol8/iss1/8