Risk as a Measure in Taxing Financial Arrangements

Australian Tax Forum, Volume 26, Number 4, 665-691

28 Pages Posted: 28 Dec 2015

See all articles by Gordon Mackenzie

Gordon Mackenzie

University of New South Wales - Australian Taxation Studies Program (ATAX)

Alfred Tran

Australian National University

Date Written: December 1, 2011

Abstract

Recent reform of the Australian laws for taxing financial instruments are expressed in terms of risk for the purpose of identifying the relevant taxpayer or characterising a financial arrangement, rather than using the traditional drafting terms of legal ownership by a taxpayer or legal form of the financial arrangements. Generally, this change in the way that the laws are expressed is for either efficiency reasons, as in the case of Div. 250, or for integrity reasons, as in the case of the debt/equity rules and the TOFA rules.

This paper reviews several of the changes to the way that the Australian legislation for taxing financial instruments is drafted where, previously, legal concepts for identifying the taxpayer were used and legal form was used for characterising a financial instrument, to the use of risk for both those purposes. It argues that risk is a better measure of who the taxpayer is and what the financial instrument is because that is consistent with the way that commerce operates.

Keywords: Risk, taxing financial arrangements

Suggested Citation

Mackenzie, Gordon and Tran, Alfred, Risk as a Measure in Taxing Financial Arrangements (December 1, 2011). Australian Tax Forum, Volume 26, Number 4, 665-691, Available at SSRN: https://ssrn.com/abstract=2708552

Gordon Mackenzie

University of New South Wales - Australian Taxation Studies Program (ATAX) ( email )

Sydney, NSW 2052
Australia

Alfred Tran (Contact Author)

Australian National University ( email )

Research School of Accounting
College of Business & Economics
Acton, Australian Capital Territory 2601
Australia
+61261255118 (Phone)
+61261254310 (Fax)

HOME PAGE: http://www.cbe.anu.edu.au

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