Abstract:
There is a dearth of authority on the application of the New Zealand Good and Services Tax’s (‘GSTA 1985’) general anti-avoidance provision (‘GAAR’) found in s 76 GSTA 1985. It was 15 years before the first decision on the GST GAAR was determined. It was not until 2007 that New Zealand’s Court of Appeal had the opportunity to consider the GST GAAR, hearing two cases in that year. Further it was not until the end of 2008 that its highest Court, the Supreme Court,considered such a case. There continues to be a dearth of authority on the operation of the GST GAAR. As explained in the paper, at first glance one would think that such a dearth of authority could be explained by the absence of avoidance opportunities under the GSTA 1985. It would be thought that the broad-based, neutral GSTA 1985 would not pose the potential for avoidance that the Income Tax Act 2007, with so many exemptions and concessions,would offer taxpayers who seek to minimise their tax. However, as the Supreme Court in Glenharrow Holdings Ltd v CIR(2009) 24 NZTC 23,236 noted, there are still considerable avoidance opportunities under the GSTA 1985. The limited case law shows that an abuse of the GST provisions extends to taxpayers the tax equivalent of alchemy. Like the ancient magical practice, taxpayers can structure arrangements to, inter alia, create GST credits and thereby strike gold. This paper considers the avoidance opportunities under the GSTA 1985 and examines how s 76 GSTA 1985 seeks to combatsuch arrangements that are designed to create gold.
