Tax Avoidance, the Rule of Law and the New Zealand Supreme Court

Abstract

Since the New Zealand Supreme Court was established in 2004, two tax avoidance cases have come before it: Ben Nevis Ltd v Commissioner of Inland Revenue, which concerned the General Anti-Avoidance Rule (GAAR) contained in the Income Tax Act; and Glenharrow Ltd v Commissioner of Inland Revenue, which concerned the GAAR contained in the Goods and Services Tax Act. This article examines these two cases. It addresses also the wording of the GAAR contained in the Income Tax Act; its interpretation by the courts, in particular the Privy Council, prior to the establishment of the Supreme Court; and the vexed question of the Ramsay principle and its place, if any, in New Zealand law. The article concludes that the Ben Nevis case, in particular, represents real progress; but that much remains to be done. This article also appears in Richard Ekins (ed) Modern Challenges to the Rule of Law (LexisNexis, Wellington, 2011).