Ermelinda Kovacs and Lindsay Muir, instructed by the Australian Government Solicitor, successfully appeared for the Commissioner of Taxation in the recent judgment of Justice Wheatley in Charles Apartments Pty Limited v Commissioner of Taxation [2025] FCA 461.

This was an appeal and cross-appeal to the Federal Court of Australia from a decision of the Administrative Appeals Tribunal.

The case concerned the deductibility of interest under s 8-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) for a special purpose vehicle in a large property development group. More particularly, the cross-appeal concerned the proper application of the refinancing principle.

The Court concluded that the Tribunal erred in concluding that $1.8 million was an allowable deduction under section 8-1 of the ITAA 1997.

The Court dismissed the taxpayer’s appeal, allowed the Commissioner’s cross-appeal and ordered that the Tribunal’s decision be set aside and the objection decision be affirmed.

The judgment may be found here.