The Australian Treasury has published a discussion paper as part
of a review of the operation of anti-avoidance provisions in
Australia's income tax laws. The stated aim of the review is to
improve the integrity, certainty and simplicity of those laws. The
paper looks at both the general anti-avoidance rule
(GAAR) in Part IVA of the Income Tax
Assessment Act 1936 (Cth) , as well as a range of specific
anti-avoidance provisions (SAAPs) scattered
throughout the income tax legislation.
In the more integrity-focussed part of the paper, the key
proposal in relation to the GAAR is that the definition of 'tax
benefit' should be expanded. Three alternative approaches to
this expansion are identified:
retain and expand the existing list-based approach in Part
replace the list with a comprehensive definition or
combine a comprehensive statement of principle with a list of
the most common tax benefits.
The paper appends a brief review of the GAARs of Canada, New
Zealand, Ireland and South Africa, from which it appears that in
broad terms Canada, Ireland and South Africa employ a comprehensive
statement of principle, while New Zealand has something of a
combined principle and list approach to defining what is a tax
benefit or tax advantage.
The paper also notes that a review of the current GAAR
provisions could coincide conveniently with moving Australia's
GAAR out of the 1936 Act and into the Income Tax Assessment Act
1997 (Cth) , in line with the ongoing tax re-write project.
That move would trigger the use of a number of more modern drafting
techniques, such as more frequent headings and examples, and
standardisation of terminology used in other places in the
The approach to SAAPs, in contrast to the GAAR, seems more
directed towards achieving greater simplicity and certainty, rather
than merely increasing the tax take. The paper identifies by list a
large number of SAAPs spread throughout the income tax laws,
suggesting that each should be examined to determine if it might be
removed, consolidated or standardised. Three principles are
where the mischief for which a SAAP was introduced is no longer
relevant due to the mischief only being available at a certain
historical time, the SAAP should be repealed
where the purpose for which a SAAP was introduced is served by
another provision, in particular the GAAR, it should be repealed
where two SAAPs cover substantially the same mischief, one of
the SAAPs should be amended so that the other SAAP can be
The paper also suggests eight principles by reference to which
the future introduction and retention of SAAPs in the legislation
could be standardised, including that a SAAP should only be
introduced where there is not an existing provision that could deal
with the mischief targeted, and that explicit policy conditions
should be clearly expressed by a SAAP.
Overall, the concerns raised in the paper are not of new origin,
with references back to Treasury papers published in 1998 and 1999,
and there is no analysis of the complex difficulties in
interpretation and application of the GAAR illustrated by court
decisions made in recent years. The development of principles to
guide future legislative developments is particularly welcome, but
it remains to be seen whether all of the challenging aspects of the
current law will be tackled, and whether taxpayers will be afforded
any greater certainty as to the likelihood of a transaction
potentially being subject to a GAAR or SAAP.
Comments are invited on a list of specific questions and also by
way of general feedback on the discussion paper. Submissions should
be made by 18 February 2011.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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