Interpreting tax statutes: Imposing purpose on a results based test

Publisher:
Atax, UNSW
Publication Type:
Journal Article
Citation:
eJournal of Tax Research, 2013, Dec 2010, 11 (2), pp. 138 - 156
Issue Date:
2013-01
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The general anti-avoidance provisions in Part IVA include specific provisions to bring within the scope of Part IVA those schemes which are by way of or in the nature of dividend stripping, and schemes having substantially the effect of a dividend stripping scheme. Judicial interpretation of the application of this provision has favoued a construction whereby purpose is implies as an element in the operation of the provisions, although there is no legislative requirement for a purpose. This paper critically examines and evaluates this judicial construction, arguing that principles of statutory interpretation would suggest that the test in relation to identifying schemes having substantially the effect of dividend stripping is a test based on the effect or outcome of the scheme, and as such, purpose should not be a relevant consideration. It is suggested that the additional requirement for purpose changes the threshold test for the operation of the provision, which, from the legislation, is a results based test based on the effect or result of a scheme.
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