GAAR in Action: An Empirical Study of Transaction Types and Judicial Attributes in Australia, Canada, and New Zealand

Canadian Tax Journal/Revue fiscale canadienne, 2020, Vol. 68, No. 2, p. 539-578

40 Pages Posted: 25 Aug 2020

See all articles by Thaddeus Hwong

Thaddeus Hwong

Faculty of Liberal Arts & Professional Studies, York University

Jinyan Li

York University - Osgoode Hall Law School

Date Written: July 2020

Abstract

The authors report the results of an empirical study on the general anti-avoidance rules (GAARs) in action in Australia, Canada, and New Zealand. The study builds on a conceptual framework, developed by Tim Edgar, that classifies tax-avoidance transactions as falling into three types (tax-attributes creation, tax-attributes trading, and tax-attributes substitution) and considers the transaction types in connection with the attributes of judges and with the broader context of judicial decision making. To contextualize the empirical analysis, the authors provide a doctrinal analysis of both the countries' GAAR provisions and the judicial interpretation of GAARs, along with some examples of divergence and convergence among the three countries. The statistical results provide some modest support for Edgar's claim that the judiciary's institutional competence is limited when it comes to identifying tax avoidance in substitution cases and that Canada's GAAR could be improved through the incorporation of an economic substance test.

Keywords: GAAR, Tax Attributes, Duke of Westminster, Economic Substance, Statutory Interpretation

Suggested Citation

Hwong, Thaddeus and Li, Jinyan, GAAR in Action: An Empirical Study of Transaction Types and Judicial Attributes in Australia, Canada, and New Zealand (July 2020). Canadian Tax Journal/Revue fiscale canadienne, 2020, Vol. 68, No. 2, p. 539-578, Available at SSRN: https://ssrn.com/abstract=3642890

Thaddeus Hwong (Contact Author)

Faculty of Liberal Arts & Professional Studies, York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Jinyan Li

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-5025 (Phone)

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