Eastfield (UK) Ltd is a small private company based in Essex. They design and manufacture a comprehensive range of architectural and drainage products,Basic Key Information:Eastfield Ltd (Eastfield) requires debt financing and therefore a new validly incorporated company called Capital Pty Ltd (Capital) provides financing to Eastfield. After Eastfield encountered an area of ​​business in which it was not financially viable for the project to continue, the directors decided to close this business. Capital therefore wrote off the bad debts and claimed a tax deduction on the bad debts, but received a notice from the tax commissioner claiming that Capital was only an extension of Eastfield and was therefore excluded from the allowance to allow claim a tax deduction. The underlying issues in this case are Capital's separate legal entity, separate from its parent company Eastfield. If it was a separate legal entity, the tax commissioner must determine whether it is possible to pierce the corporate veil through an agent relationship or by characterizing the capital as a sham . Given these questions, other key facts to consider are the relationships between the parent company, Eastfield and Capital. Capital's employees are provided and financed by Eastfield, Capital distributes all of its income to Eastfield in the form of dividends, Eastfield determines the capital structure which Capital then implements to meet demands if its parent company Separate legal entity: Capital is created by Eastfield as a subsidiary company and was validly incorporated in March 2010. The Tax Commissioner decides to reject the tax claim for a bad debt between the parent company and the subsidiaries, as he suggests that there is.. .... middle of paper... ...11. Walker V Wimborne [1976] 137 CLR 1Academic Journals: 1. Bainbridge S, “Abolishing Veil Piercing” (2001) 26 Journal of Corporation Law 479 at 506-5142. Harris J, “Lifting the Corporate Veil in Industrial Disputes” (2004) 22 Company and Securities Law Journal 693. Harris J, “Lifting the Corporate Veil on the Basis of Implied Agency: A Reassessment of Smith, Stone and Knight” (2005) 23 Journal of Corporate and Securities Law 74. Hargovan, A. (2006). Corporate and securities law: breach of duties of directors and piercing of the corporate veil”. Australian Business Law Review, 34(4), 304-3085. Hargovan A and Harris J, “Together Alone: ​​Business Group Structures and Their Legal Status Revisited” (2011) 39 Australian Business Law Review 85.Book:1. Harris, Hargovan and Adams, Australian Corporate Law, 4th edition, 2013, LexisNexis/Butterworths