Abstract:
The GST regime has now been operating in Australia for a decade.1 During that period there has been only one reported case on GST tax avoidance. The absence of other cases indicates either the GST regime is working as intended, and there is no avoidance of GST, or the ingenuity of taxpayers seeking GST benefits has simply not been detected by ATO. A New Tax System (Goods and Services Tax) Act 1999 (“GST Act”) contains a number of measures to combat avoidance of GST. There are a range of specific anti-avoidance provisions to counter particular instances of tax avoidance. These specific rules are narrowly targeted provisions to prevent foreseeable instances where taxpayers may otherwise attempt to defeat the normal or expected operation of the relevant statute. More importantly, Div 165 GST Act contains a broad-ranging general anti-avoidance provision (“GAAR”) to prevent abuse of the GST regime. Unlike the specific anti-avoidance rules, Div 165 is widely-worded with open-ended application. Such provisions4 are designed to apply to the unanticipated and unforeseen behaviour by taxpayers that, although contrary to neither the substantive provisions of the Act nor any applicable specific anti-avoidance provisions, nevertheless breach the scheme and purpose of the relevant statute. Despite the lack of case law, it can be presumed that tax avoidance is as much a part of the landscape of GST as it is for income tax. But while there have been many income tax avoidance cases litigated over the past decade, there is an understandable dearth of GST cases. The Australian Administration Appeals Tribunal heard the sole GST avoidance case under Div 165 in 2006. Following the enactment of a GST regime in New Zealand in 1986, it took 15 years for the first case to be considered by the courts under s 76 New Zealand Goods and Services Tax Act 1985 (NZGSTA). Those initial cases, involving fairly blatant schemes to obtain unwarranted tax benefits, were decided in favour of the Commissioners in both jurisdictions.
