Tax avoidance in New Zealand: in search of principles

This paper analyses the judicial application of New Zealand’s general anti-tax avoidance rule contained in s BG 1 of the Income Tax Act 2007 in the light of three 20th Century jurisprudential theories of legal reasoning. It focuses specifically on the role of moral principles in the process of judicial decision-making and explores whether existing case law on the avoidance provision can be seen as supporting the hypothesis that judges apply moral principles when reaching decisions. Following the test laid down for tax avoidance in the Supreme Court’s decision in Ben Nevis Ventures Ltd & Others v Commissioner of Inland Revenue, the paper concludes that judges have the ability, in some cases, to reach their decision about whether there has been tax avoidance by applying the moral principle that tax should apply uniformly to all cases that are economically similar.