Tax Alert - August 2013
Tax Alert is a monthly publication that keeps you up to date with the latest developments in tax. The alert is compiled by our national tax specialists who are continually monitoring the outlook for new tax developments and analysing the implications for our clients.
Clarity, controversy, or both: Inland Revenue’s finalised guidance on tax avoidance
The tax community has at last received the Commissioner of Inland Revenue’s long-awaited finalised interpretation statement on tax avoidance, “Tax avoidance and the interpretation of sections BG 1 and GA 1 of the Income Tax Act 2007” (the Interpretation Statement). The Interpretation Statement has had a nearly 10 year gestation, and comes 23 years since Inland Revenue’s previous policy statement on tax avoidance.
One of the issues affecting timing has been the release of significant court decisions on tax avoidance. The need to factor in the court’s pronouncements has caused delays in producing progressive drafts of the Interpretation Statement. This issue remains even with the release of the final statement - the impending appeal of the Court of Appeal’s much-debated decision in Alesco New Zealand Ltd v Commissioner of Inland Revenue (Alesco) concerning optional convertible note financing will provide an opportunity for the Supreme Court to again apply the “Parliamentary contemplation” test for tax avoidance established in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue (Ben Nevis). No doubt tax advisers and taxpayers alike will be interested to see if Justice Susan Glazebrook – prior to her appointment to the bench, a reputable tax lawyer and author of an authoritative text on the financial arrangements rules – is among the panel hearing the appeal.
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