handbook-tb

Graeme S. Cooperlegislative anti-abuse rules, general anti-abuse rules and general judicialdoctrines that are part of domestic law do have the potential togenerate conflicts between the treaty and domestic law, and that incases where the other treaty partner considers that the domestic ruleresults in a direct conflict, the treaty must be given priority. 18The issue is not simple, however. It is worth noting that Canada,which is currently undertaking a review into mechanisms to curb treatyabuse, appears inclined to approach the problem through amendmentsto its domestic law. 19 The position taken by the Governmentof Canada is that it can approach the problem through domestic provisionsbecause “domestic law provisions to prevent tax treaty abuseare not considered by the OECD or the United Nations to be in conflictwith tax treaty obligations and a number of other countries haveenacted legislation to that effect.” 20 Australia has attempted to resolveany doubt by inserting a provision in its domestic law which assertsthat its general anti-abuse rule will prevail over its treaties, and sincethat 1981 provision has been in place, it has been assumed that all treatiesentered into thereafter were negotiated on the basis that this provisionwas acceptable to the treaty partner.The Commentary on the United Nations Model Convention proposesanother way of dealing with any argument about inconsistency. 21It suggests mechanisms inside a treaty which are likely to mirror the18See paragraph 15 of the Commentary on Article 1 of the UnitedNations Model Convention.19The Government of Canada announced in its 2013 Budget that itwould initiate a project to address treaty abuse. The Ministry of Financeof Canada released a consultation paper in August 2013: Government ofCanada, Consultation Paper on Treaty Shopping — The Problem and PossibleSolutions, available at http://www.fin.gc.ca/activty/consult/ts-cf-eng.asp. Inthe February 2014 Budget, the Government of Canada canvassed a domesticprovision to curb treaty shopping: Government of Canada, Budget 2014,Annex 2 — Tax Measures; Supplementary Information, available at http://www.budget.gc.ca/2014/docs/plan/anx2-1-eng.html.20Government of Canada, Budget 2014, Annex 2 — Tax Measures; SupplementaryInformation, supra note 19.21See paragraphs 34 ff. of the Commentary on Article 1 of the UnitedNations Model Convention.288