Analysis Of Prososed Changes In Managed Investment Schemes-australian Tax Office Tax Ruling Tr 2007/d2

2 . Critically Analyse the Argument that Investor s Contributions to Such escapes atomic number 18 Capital or of a Capital Nature and atomic number 18 therefore Not Deductible to a lower place persona 8 of the ITAA 1997The deductibility of the contributions under sec 8 of the ITAA 1997 depends upon the determination of the character of the expenses whether they atomic number 18 of crown character or of a revenue personality being a barter expense . In this obeisance two sets of arguments can be attempted to arrive at a conclusion about the deductibility of the investors contributionsArguments in Favour of Changes Suggested under TR 2007 /D2 (Investments Not-DeductibleThe requirement of Sec 8-1 of the ITAA 1997 for the purpose of deductibility is that the amount expended should be unfastened of producing some assessable income by means of some business activity being carried out with the amount invested . Capital expenses or expenses in the nature of capital are specifically excluded by sec 8 . As has been decided in Vincent V Commissioner of Taxation [2002] FCAFC 291 at [60] the investments in the agricultural Managed Investment Scheme can be categorized as capital wasting disease and hence cannot be deductedIt is also appropriate to determine the nature of the interest being acquired by the investors by becoming a member of a registered managed investment scheme , as to whether such interest represents capital or not and also whether the income derived from the investments is to be treated as income from the business carried out by the investors themselvesFor considering the capital nature of the investors interests , the applicable provision are chapter 5C of the Corporations lay out relations with registration and regulation of the management schemes and divide 9 of the Corporations Act that defines the `managed investment Scheme . While section 601 FA defines the `responsible entity Clauses (a ) to (e ) of Section 9 defines `scheme propertyThe decision in the case of Enviro Systems renewable Resources Pty Ltd v .

Australian Securities and Investments Commission [2001] SASC 11 is also relevant in that the concept of `responsible entity is established and the success of otherwise of the scheme is dependent on the functioning of the `responsible entity without the participants having to add any business skills other than investments and such investors are to be treated as passive investorsA number of other decisions in cases like Waldron v . Auer [1977] VR 236 and ASIC v . Enterprise Solutions 2000 Pty Limited (2000 ) QCA 452 Crocombe v . Pine Forests of Australia Pty Ltd [2005] NSWSC 151 ASIC v Pegasus Leveraged Options Group Pty Ltd (2002 ) 41 ACSR 561 added further dimensions to this viewSimilarly decisions in the case of Investa Properties Ltd anor [2001] NSWSC 1089 ASIC v . Knightsbridge Managed Funds Ltd anor [2001] WASC 339 In Southern wine Corporation Pty Ltd (in liq ) v . Frankland River Olive Co Ltd anor [2005] WASC 236 determined the nature of the scheme property to be covered under section 9 of the Corporations ActFrom a consideration of the concepts of...If you want to get a full essay, order it on our website: Ordercustompaper.com

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