The Peterson Case and its Impact on the Rules in BNZ Investments Ltd. and Cecil Bros.

TAXATION ISSUES IN THE TWENTY-FIRST CENTURY, Adrian Sawyer, ed., Christchurch, 2006

Victoria University of Wellington Legal Research Paper No. 43/2011

13 Pages Posted: 14 May 2010 Last revised: 11 Apr 2015

John Prebble QC

Victoria University of Wellington - Faculty of Law; Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien; University of Notre Dame Australia - School of Law

Date Written: 2006

Abstract

The Privy Council delivered its advice in the film shelter case of Peterson v Commissioner of Inland Revenue (2005) 22 NZTC 19,098 (PC), allowing Mr Peterson’s appeal. While the Peterson case was a notable win for Mr Peterson, this essay argues that in a broader context it was a major victory for the Commissioner of Inland Revenue and for tax payers who do not invest in shelters. The Privy Council put paid to several judicial heresies that threatened to enfeeble section BG1 of the Income Tax Act 2004, the general anti-avoidance rule, which is the Commissioner’s heaviest anti-avoidance artillery. Perhaps even more importantly, their Lordships interpreted the legalistic deduction rule in Cecil Brothers Pty Ltd v FCT almost into oblivion and recognised powers of apportionment in the Commissioner that no one thought he possessed. The judgment contains a detailed forensic template for the Commissioner to use in later cases.

Keywords: Income Tax Law, Income Tax Act 2004, Tax shelters, anti-avoidance, Cecil Brothers Pty ltd v FCT.

JEL Classification: K34

Suggested Citation

Prebble QC, John, The Peterson Case and its Impact on the Rules in BNZ Investments Ltd. and Cecil Bros. (2006). TAXATION ISSUES IN THE TWENTY-FIRST CENTURY, Adrian Sawyer, ed., Christchurch, 2006; Victoria University of Wellington Legal Research Paper No. 43/2011. Available at SSRN: https://ssrn.com/abstract=1605426

John Prebble QC (Contact Author)

Victoria University of Wellington - Faculty of Law ( email )

PO Box 600
Wellington, 6140
New Zealand
+64 4 463 6311 (Phone)
Papers Indexed at HOME PAGE (Fax)

HOME PAGE: http://www.victoria.ac.nz/law/staff/prebble-scholarly.aspx

Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

University of Notre Dame Australia - School of Law

Sydney Campus, New South Wales
Australia

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