Case Note on Fletcher v FCT (1991) 22 ATR 613:

The facts of this case were that the taxpayer (and three others in partnership) entered a complex scheme, which involved the partnership, and annuity and loan arrangements. The scheme was financed through a series of "round robin" cheques and promised substantial deductions in the first five years of the 15-year plan. A number of documents were exchanged but no cash payments were made. This was calculated to return neutral cash flows with high tax deductions …

…anticipated in Phillip's case, a disparity between outlay and income may trigger a more rigorous examination of a contract or arrangement. As was suggested in Ure's case, the absence of a commercial quid pro quo will raise questions about the purpose of the expenditure. Where there is a dual purpose, or a purpose other than income production, expenditure is to be apportioned and there will be circumstances where purpose may mean subjective purpose or motive.