Clash of the Deeming Provisions: Pre-Capital Gains Tax Concessions, Tax Consolidation and Policy in the Federal Court

Abstract

The Federal Court of Australia in Financial Synergy Holdings Pty Ltd v FCT endeavoured to effectively reconcile complex and inconsistent deeming provisions in relation to capital gains tax (CGT) and tax consolidation. The interpretative approach that was adopted at first instance resolved the matter directly at hand, but also raised a number of problems that may not have been immediately apparent. In one view, these seemingly unforeseen complications would arise because of the special rules that govern tax consolidation, and might manifest themselves: (1) on the wholesale or staggered disposal of membership interests in a subsidiary member by a consolidated group; and (2) in terms of the pot..