The role of New Zealand's general anti-tax avoidance rules

Abstract

This paper considers a number of interrelated propositions that determine the role of the New Zealand general anti-avoidance rule („GAAR‟) (ss BG1and GA1 ITA) in taxation law jurisprudence. The first issue relates to the interplay between the GAAR and specific statutory provisions. The second issue relates to the interpretation of tax provisions, including more specifically the GAAR itself. The answer to these issues will ultimately determine the continuing relevance of the „Duke of Westminister principle‟. To date, despite the enactment of New Zealand GAARS, this doctrine has continued to be a pivotal principle in taxation law jurisprudence. Obviously, in turn, this has meant that the New Zealand GAAR has been ineffective to deal with avoidance schemes that have been purposely structured to fall within the formal parameters of a provision. It is contended that recent decisions of the newly constituted New Zealand Supreme Court indicate that if the Duke of Westminster principle is not dead, he should be “very careful when he crosses the road”.