A market-based method of determining the capital revenue boundary: The tax treatment of depreciation
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Abstract: One of the certainties of tax is that the boundary between revenue and capital is blurred and difficult. A substantial body of case law has failed to produce clarity and precision. The authors propose a new market-based approach to identifying whether a transaction is on revenue or capital account. In this paper, the approach is applied in relation to depreciation. The authors conclude that the current system of allowing specific deductions for depreciation is unsound and should be replaced by the market-based approach which delivers outcomes that are more certain, more equitable, and more soundly based on economic principle.
Author
profiles:
Bill
BUTCHER
Bill Butcher is a Senior Lecturer in the School of Business Law and Taxation, University of New South Wales.
Current at 8 May 2008
Ewan
McCANN
Ewan McCann is a Taxation Economics Consultant. Latterly Principal Economist, Policy Advice Division, Inland Revenue Department, New Zealand.
Current at 8 May 2008
