GreenEco Ltd (GreenEco) operates as a prominent player in the renewable energy sector, with global outreach. It is incorporated in Australia with its headquarters in Sydney. The scale of the vast business operations undertaken by the company requires a continuous stream of significant debt finance to enable existing projects to be financed for completion. To serve as a vehicle for in house financing, GreenEco established a wholly owned subsidiary company called EcoFinance Ltd (EcoFinance). EcoFinance appointed five directors, all of whom also sit on the board of GreenEco. EcoFinance has no employees of its own the workforce is provided by GreenEco which EcoFinance pays from its own funds for their service. It is agreed that all the profits of EcoFinance will be distributed as a dividend to GreenEco.

EcoFinance has played a pivotal role in funding various projects of GreenEco. A, notable one is the Sustainable Solutions Initiative. This initiative aimed to develop and maintain advanced waste-to-energy facilities, aligned with GreenEco Corporation's mission for sustainable practices. However, the initiative encountered complex technical hurdles, demanded more frequent maintenance than originally projected, experienced escalated costs, and suffered from a decline in the market value of the energy produced. Following unsuccessful attempts to divest from the initiative, the board of GreenEco decided to discontinue the project. EcoFinance classified the outstanding loan to GreenEco for the Sustainable Solutions Initiative as a bad debt and subsequently sought a tax deduction under relevant tax legislation.

In response, the Commissioner of Taxation issued a notice disallowing the tax deduction, asserting that EcoFinance Holdings was effectively an extension of GreenEco's operations. The directors of EcoFinance Holdings are discontent with this decision and seek advice on how to appeal against the decision of the Commissioner of Taxation.

Advise the directors of EcoFinance as to their chances of success in claiming the tax deduction for the bad debt arising from the failed business project undertaken by GreenEco using relevant case laws.