Federal Commissioner of Taxation v. Spotless Services Ltd

Holding

Part IVA of the Income Tax Assessment Act 1936 applies where a sole or dominant purpose of a scheme was to obtain a tax benefit, even if there was a commercial purpose.

Facts

Spotless invested in a Cook Islands deposit structure that produced foreign-tax-exempt interest.

Reasoning

The High Court of Australia held that Part IVA applied because obtaining the tax benefit was the dominant purpose. The case is the leading authority on the dominant-purpose test under Part IVA.