1. The Chamber of Tax Advisers of Russia International Tax Congress
St Petersburg
19 September 2013
David Russell AM QC
Were going to get Kuroda – me consolation prize
Thomas Lee – persistent
Had to change from Transfer Pricing
Told could pick own topic – only requirement was that it be “sexy”
Don’t usually associate sex with tax: 3 letter monosyllabic words ending in “X”
Churchill/Attlee post 1945 – if you see something which big, healthy and strong you will want to put a tax on it
Cases in Australia in which I have been involved involving sex industry – interesting tax issues (employer/employee relationship, section 51AE) but not really suitable for here
Thomas thought it necessary in subsequent to explain that what he meant was an attractive topic which would grab attention
So idea of practice development

2. General Anti-Avoidance Provisions: Do they really work, and do they
discourage foreign investment?

3. Role of Presentation General outline of topic
Full paper available on Chamber website or

4. The Chancellor’s Foot
The need for stable and predictable outcomes to litigation and disputes
A function of the Rule of Law
The “smell test” and the Revenue’s nose

5. Tax avoidance responses
Ramsay doctrine
Abus de droit
Business purpose test (US)
General Anti Avoidance Rules

6. GAARs – an Australian innovation
Predates Federation
Part of Federal Income Tax from the outset
Suggests GAARs are not the end of the world – but for a long time not effective
Modern history started in 1981

7. Key concepts
Sham
Evasion
Mitigation
Avoidance

9. Key concepts (revised)
“Acceptable” tax planning
“Gross”, “egregious” or “unacceptable” tax avoidance
Not entirely clear how differs from third and fourth concepts on previous slide

10. GAAR considerations
Removal of implication against tax avoidance on other provisions.
How to strike a reasonable balance?
Former section 260 as example

11. Key issues Change of legal form of receipt Choices in legislation
Disposal in income source
Antecedent liability

12. Interpretation in the Courts
Minds can reasonably differ
Explanatory materials (“travaux preparatoires”) of little assistance in common law context

13. Problems?
“Do nothing” alternative
Commercial arrangements

14. The UK approach
Aronson Review
Broad spectrum v. narrow spectrum

15. GAAR advantages - Aronson
Deterrence of “unacceptable” schemes
A level playing field for business and professionals
Enhanced certainty in construction of provisions
Improved simplicity in legislative drafting
Administrative simplicity without discretion
Building trust

16. Risks Cherry picking of Report Mission creep
Inversion of role of taxpayers and revenue
Difference of perspective

17. Economic effect Potential to create issues of sovereign risk
Need to have both consistency if approach and a realistic approach to commercial issues
A very high price can be exacted if competitive advantage foregone

18. THE END