TAX NEWS - June 2010

Australian Taxation Office fudges ruling

After examining a Macquarie Bank structured finance product for the best part of a year, the Tax Office has made no ruling on its most controversial aspect.

A tax ruling released yesterday about the Macquarie Flexi 100 product found certain investors who took the full risk in financing their investments in the product could receive a 100 per cent tax deduction on their interest bill.

But the ruling was silent on whether investors should receive tax deductions for using "limited recourse" loans to finance their investment in the product. The "limited recourse" loans have led to concerns of a "round-robin" financing structure that has no economic effect and whose sole purpose is obtaining a tax deduction on the interest.