Tax Avoidance: Causes and Solutions - Scholarly Commons Home

The relationship of s BG1 with other provisions is not addressed in the current ITA2004.
When section BG1 should apply so as to displace other provisions of the ITA is a problem
to be considered. The example of such provision may be the provisions offer taxpayers
incentives to modify or encourage certain types of economic activity 238 . The purpose
approach is a judicially created technique to answer this question, but there is no legislation
to answer this question. This is the primary issue making the application of section BG1
uncertain. The Canadian approach solves the problem by independently stating the
relationship of the GAP to the rest of the Act, in section 245 of the CITA.
8.4 Interpreting the law
Having an effective policy formation and implementation will help reducing the uncertainty.
Appropriate interpretation of the law may not necessarily require anti-avoidance doctrines
but may involve a purposive interpretation of the law. In the interests of certainty the
Commissioner should express views as to how policy will be identified and how
interpretation will be approached. Applicable criteria should be specified, rather than left
open-ended.
One of the examples of such interpretation is “Law Administration Practice Statement, PS
LA 2005/24”, which released by the Australian Taxation Office and provided information
about how to apply the general anti-avoidance rules at its disposal. This type of document
should also include effective detection, audit, and dispute, judicial resolution etc.
It would also make sense for the Commissioner to publish some guidance to taxpayers. The
guidance can list or specify transactions that the Commissioner intends to challenge. This
can alert taxpayers when they take a risk by entering into such transactions, and may deter
them from doing so.
8.5 Conclusion
This thesis discusses possible causes and solutions of tax avoidance. For different person,
tax avoidance has different meaning. The various definition and understanding of tax
avoidance is reviewed and analyzed. Then, the current approach using by New Zealand
court to discover the true meaning of a transaction is discussed in. The harms caused by
238 Ibid
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