The Inland Revenue’s Draft Interpretation Statement on Tax Avoidance – Are We Any Further Ahead?

A revenue authority’s application of a general anti-avoidance rule (GAAR) is often a vexed issue where taxpayers and their advisors complain about uncertainty while the revenue authority argues that the nature and effective operation of a GAAR precludes anything more than general guidance at best. In New Zealand this issue has festered for well over a decade, with the latest development being a second draft interpretation statement issued in late 2011. In this article, the authors set the scene and review the key issues raised in the submissions, and suggest that there is plenty of scope for improving the draft statement before it is finalized later in 2012.