DESCRIPTION
A taxpayer enters into a marketing agreement with a tax haven based Internet marketer to 'establish a location on the Internet and to carry on the business of selling advertising and marketing services over the Internet'. The agreement is for one year only. 2. The taxpayer prepays a marketing fee of, for example, $100,000 to the Internet marketer of which $20,000 is sourced from the individual's own means and $80,000 is borrowed (for a period of one year) from another tax haven entity. 3. The taxpayer claims a tax deduction of $100,000. 4. The taxpayer's borrowed funds are guaranteed and indemnified by an Australian company of which the taxpayer is the sole owner and director. 5. The Internet marketer guarantees a return of at least $20,000 in advertising revenue to the taxpayer. 6. The borrowed funds of $80,000 are not repaid. Neither the taxpayer nor the guarantor is pursued to repay the borrowed funds.