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Policy Forum: New Zealand's General Anti-Avoidance Rule (GAAR) - A Triumph of Flexibility Over Certainty.

18 Pages Posted: 12 Mar 2014  

Craig Elliffe

University of Auckland - Faculty of Law

Date Written: November 20, 2013


The oldest GAAR in the world is a somewhat crude instrument that has been honed to a very sharp edge by the New Zealand Supreme Court. The GAAR in New Zealand is classic evidence that, at least in New Zealand, such broadly worded anti-avoidance provisions are ultimately judge-made law. This is borne out through an analysis of the history of the jurisprudence relating to the GAAR which this article seeks to do.

The consistent problem of the New Zealand GAAR, and perhaps any statutory GAAR, is that it is drafted too broadly to provide certainty of outcomes to taxpayers, revenue officials and the judiciary. There are, of course, reasons why Parliament drafted it widely. Its purpose is to anticipate and defeat the ingenious tax planning of clever people. The process of statutory interpretation of the GAAR in New Zealand has been, and is, fundamentally, one of judges trying to make sense of a provision which on a literal interpretation has never made sense.

That the New Zealand GAAR is predominantly judge-made law also explains, in so far as it is possible, how the events of the last five years have quite significantly changed and developed the New Zealand tax avoidance landscape. This article attempts to explain the recent experience in the light of the features of the New Zealand GAAR.

Keywords: General anti-avoidance rule, GAAR, tax avoidance, judge made law, statutory interpretation, certainty of law, integrity of the tax system

JEL Classification: K34

Suggested Citation

Elliffe, Craig, Policy Forum: New Zealand's General Anti-Avoidance Rule (GAAR) - A Triumph of Flexibility Over Certainty. (November 20, 2013). Canadian Tax Journal/Revue Fiscale Canadienne, Vol. 62, No. 1, 2014. Available at SSRN:

Craig Elliffe (Contact Author)

University of Auckland - Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

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