The requirement under Divisions 10B and 10BA of the Income Tax Assessment Act 1936 (Cth) that monies be 'expended directly in producing the film' means there must be a sufficiently close connection between the outlay and the production process, following Commissioner of Taxation v Faywin Investments Pty Ltd (1990) 22 FCR 461. Where the Crown abandons sham as a ground of criminality in a tax fraud prosecution, the Crown Prosecutor should avoid using the word 'sham' or equivalent emotive language such as 'smokescreen', though the use of such language will not necessarily vitiate the trial if sufficient time passes and adequate directions are given. Evidence of the creation of false invoices to mislead the tax office may constitute proof of the offence itself (knowledge and assistance in fraud) rather than merely evidence of consciousness of guilt, and accordingly does not require a Lucas/Heyde direction.
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