Dissected debt : developing a better legislative response to FCT v Myer Emporium Ltd

After many decades of actual and proposed reform, Australia's rules for the taxation of debt arrangements remain deeply flawed. A notable problem is the absence of appropriate rules for dissected debt arrangements, where a creditor dissects a debt into interest and principal
repayment components and disposes of one or both of these separately, as occurred in the leading case ofFCT v Myer Emporium Ltd. The knee-jerk reaction to Myer by the High Court and the legislature is a model of bad tax policy and bad tax law. The approach adopted overseas, using the United States as the clearest example, is a logical one for Australia to follow.