I wish I could get a list of G20 delegates and send them copies of the documents Chevron✓ and the Australian Tax Office have filed for Chevron's appeal against an ATO claim for back taxes and penalties.

A crackdown on profit and tax shifting by international companies is on the agenda for the G-20's meeting in Brisbane in November just over a month's time. The Chevron case is a reminder, however, that layer upon layer of tax legislation has built up like guano over the decades.

Tax law is now a morass where the line between legitimate tax minimisation and strategies that breach tax law is murky and open to endless interpretation. It's not so much a body of law these days as an industry, with a very keen sense of survival.

The courts do their best to cut through the crap and keep the system functional, but they are grappling with a monster. It would take a complete rewrite of tax law around the world to clear the air, and let's face it, that's not going to be delivered in Brisbane next month. The best we can hope for is that it will be some kind of aspirational goal.

Until 2001, US-based Chevron and Texaco were separate companies. Chevron ran its Australian business through Chevron Australia Pty Ltd, and Texaco ran its Australian business through Texaco Australia Pty Ltd.

They merged in 2001 and their interests were restructured in 2002. A new holding company, Chevron Australia Holdings Pty Ltd, was formed. Chevron Australia Pty Ltd became a subsidiary of the new holding company and according to the ATO, its paid up capital was reduced by $2.9 billion to $29 million.

A subsidiary of the new Australian holding company, Chevron Funding Corporation, was also created, the ATO says. Chevron Funding raised money in US dollars in the US commercial paper market and then advanced $US2.4 billion to its Australian holding company parent.

The ATO claims that Chevron Funding Corporation raised the dough at a rate of about 1.2 per cent and advanced the money to its holding company parent at a rate of about 9 per cent.

As the holding company repaid the loan and interest, Chevron Funding booked profits. These profits were returned to the holding company in the form of tax-free dividends, the ATO says, and were a source of funds that the holding company relied on to service the money its subsidiary had advanced.

It was referred to by Chevron as the "arbitrage" on the deal, the ATO says. The interest payments on the debt were tax-deductible, and "the higher the interest rate on the loan from Chevron Funding Corporation the greater the arbitrage, which was not subject to tax in either the US or Australia".

The ATO is after between $212.5 million and $258.8 million in back tax and between $64.7 million and $21.3 million in penalties, depending on what "arm's length" interest rate is used to calculate tax foregone, and what penalty rate is applied.

In its Federal Court submission, Chevron argues however that the ATO's claims are invalid and in part unconstitutional, that the tax treaty between Australian and the US does not empower the ATO to take action against Chevron Australia Holdings, and that there was no profit-shifting anyway.

An "arm's length consideration" for the loan Chevron Funding made to its parent would have been no less than the amount that was paid, it says, and there was no "transfer pricing" benefit.

I won't even attempt to decide between Chevron's 137-page appeal and the ATO's 91-page response. That's the Federal Court's job, and the examination will extend beyond the dry bones of the Tax Act.

Chevron is a real company doing real things including the Gorgon gas development and one the key points of contention, for example, is whether the loan from Chevron Funding to Chevron Australia Holdings was commercially priced – whether what the ATO says is the "implicit credit support" of the US parent should have been a factor, for one thing. Chevron says that even if such implicit support exists, it is a nebulous concept that has little impact on loan pricing.

Who knows? And that's the larger point, really. Tax minimisation, avoidance and evasion have become difficult to distinguish because tax law itself has become too complicated. It's a world where, to paraphrase Disney's version of Lewis Carroll's Alice in Wonderland in 1951, nothing seems to be what it is, and everything seems to be what it isn't.

The G20 could begin to untangle the Gordian Knot, by agreeing on firm targets for tax harmonisation and simplification. I am not holding my breath.

ATO's case against Chevron underlines difficulties of tax reform