Goods and Services Tax Act 1985

76 Avoidance

(1)

A tax avoidance arrangement entered into by a person is void against the Commissioner for tax purposes.

(2)

A tax avoidance arrangement is one that directly or indirectly—

(a)

has tax avoidance as its purpose or effect; or

(b)

has tax avoidance as one of its purposes or effects, whether or not another purpose or effect relates to ordinary business or family dealings, if the purpose or effect is not merely incidental.

(3)

If a tax avoidance arrangement is void against the Commissioner, the Commissioner may adjust the amount of tax payable by, or the amount of tax refundable to, a registered person affected by the arrangement, whether or not the registered person is a party to the arrangement, in the manner the Commissioner considers appropriate to counteract any tax advantage obtained by the registered person from or under the arrangement.

(4)

For the purpose of subsection (3), the Commissioner may, in addition to any other treatment the Commissioner considers appropriate, treat—

(a)

a person who is not a registered person and who is a party to or has participated in an arrangement as being a registered person:

(b)

a supply of goods and services, whether or not a taxable supply, that is affected by or is part of an arrangement as being made to or by a registered person:

(c)

a supply of goods and services as occurring in a taxable period that, but for an arrangement affected by this section, would have occurred in the taxable period in which the supply was made:

(d)

a supply of goods and services as having been made, or consideration for the supply as having been given, at open market value.

(5)

Subsection (6) applies if—

(a)

a person (person A) enters into an arrangement on or after 22 August 1985 whereby a taxable activity formerly carried on by person A is carried on, in whole or in part, by another person (person B) or other persons; and

(b)

either—

(i)

person A and person B are associated persons; or

(ii)

person A and the other persons are associated persons.

(6)

For the purpose of sections 15(3), 15(4), 19A(1) and 51(1), the value of the supplies made in the course of carrying on all taxable activities in a 12-month period starting on the first day of any month by person A and person B or person A and the other persons is, to the extent that the value relates to supplies arising from the taxable activity formerly carried on by person A, each to be treated as being equal to the aggregate of the value of the taxable supplies made by all persons for that period.

(7)

The Commissioner may, having regard to the circumstances of the case and if the Commissioner considers it equitable to do so, determine that subsection (6) does not apply to person A, person B or the other persons.

(8)

For the purpose of this section—

arrangement means a contract, agreement, plan or understanding, whether enforceable or unenforceable, including all steps and transactions by which it is carried into effect

tax avoidance includes—

(a)

a reduction in the liability of a registered person to pay tax:

(b)

a postponement in the liability of a registered person to pay tax:

(c)

an increase in the entitlement of a registered person to a refund of tax:

(d)

an earlier entitlement of a registered person to a refund of tax:

(e)

a reduction in the total consideration payable by a person for a supply of goods and services.

Section 76: substituted, on 10 October 2000 (applying on and after 10 October 2000), by section 116(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).