Commissioner of Taxation of the Commonwealth of Australia v Australian Guaranteee Corp Ltd [1984] FCA 250

Income Tax - allowable deduction - deferred interest debentures - debenture not redeemable until expiration of 5 years - interest not paid or credited prior to maturity - interest treated by taxpayer as accrued liability during income year - whether interest outgoing incurred in relevant year - taxpayer subjected

to liability to pay interest under deferred debenture

notwithstanding interest not "credited" or "earned" during relevant year - accrual of interest at common law - meaning of "earned" - relevancy of accounting practice

Income Tax Assessment Act 1936 s.51

The Commissioner of Taxation of the Commonwealth of Australia v.

trali Guarant Corporation Limited

No. NSW G409 of 1983

CORAM: Toohey, McGregor & Beaumont JJ. 23 August 1984

Sydney

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

No. G409 of 1983

~~~ ew

ON APPEAL FROM THE ADMINISTRATIVE LAW DIVISION OF THE SUPREME COURT OF NEW SOUTH WALES

BETWEEN:

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Appellant and AUSTRALIAN GUARANTEE CORPORATION LIMITED Respondent QO R D E R JUDGES MAKING ORDER : Toohey, McGregor & Beaumont JJ. DATE OF ORDER : 23 August 1984 WHERE MADE : Sydney

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay to the respondent its costs of

the appeal.

ee

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION

Wo. G409 of 1983

w~wew er ow

ON APPEAL FROM THE ADMINISTRATIVE LAW DIVISION OF THE SUPREME COURT OF NEW SOUTH WALES

BETWEEN:

THE COMMISSIONER OF TAXATION

fe) OMMO' TH OF AUS AppeLlant and AUS I. GU. COR! TION L TED Respondent

CORAM: TOOHEY, McGREGOR & BEAUMONT JJ. 23 AUGUST 1984

REASONS FOR JUDGMENT

TOOHEY J.

Deferred interest debentures are said to have the advantage to the lender that any liability for income tax for

interest thereon is deferred until the debenture matures.