Food for Thought

Food for Thought 1


Zen and the Art of Tax Compliance – a prescient presentation in 2009 on the five streams of consciousness and the quest for certainty and voluntary compliance in the context of proposed changes in 2009 to accounting for tax uncertainty now under consideration again.

“Consideration of the Timeline of Tax Uncertainty that has prevailed historically (see Slide 26) continues to inspire a risk based approach to management of tax by taxpayers and revenue authorities alike”.

Food for Thought 1

Food for Thought 2

Tip of a green leaf dropping a droplet of water into water. The tip of the leaf has a large water droplet. There are smaller water droplets on other portions of the leaf and circular ripples in the water.

Tax and Ethics – the absence of a definitive direction on statutory interpretation of tax legislation is at the heart of Tax Uncertainty and the tax morality debate.

“A key contributor to the debate of ethics and morality in relation to tax is the inherent uncertainty in the tax law. At the epicentre of that uncertainty is the spectrum of approaches available to all stakeholders (taxpayers, the judiciary, advisers/intermediaries and revenue authorities alike) in regard to statutory interpretation of revenue legislation, which is evidenced in case law.

This spectrum of statutory interpretation ( i.e. from a literal reading to a purposive approach) prevails in the absence of a mandated requirement that all revenue legislation be the subject of interpretation by reference to its intended purpose as evidenced in all the extrinsic material as well as the ordinary meaning of the words of the statute in which they appear and, where appropriate, tax legislation should be supported by clearly articulated purpose and intent within the legislation itself.”

Food for Thought 2

Food for Thought 3

Hand holding on light bulb with green plant inside for saving earth, nature blue sky background. Idea environmental conservation Concept

The essence of Lord Denning’s predication test for tax avoidance in Newton in 1958 was that we know tax avoidance when we see it (an Elephant) and we know ordinary business and family dealing when we see it (not an Elephant). Australia has favoured general anti – avoidance provisions to address tax avoidance. The Legislators have chosen to attempt to describe the Elephant in the room of “tax avoidance” in Part IVA and not describe the Elephant of “ordinary business or family dealing” . Unlike the Elephant of Tax Avoidance we all know the Elephant of “ordinary business and family dealing” when we see it . The Commissioner would not make a determination to apply Part IVA to an “ordinary business or family dealing” as “tax avoidance”……. would he? The 2012 amendments to Part IVA refine what is tax avoidance and leave “ordinary business or family dealing” to the Elephant test.

“If the jurisprudence leading up to and in the wake of the repeal of Section 260 tells us anything it tells us that knee jerk reaction to lack of certainty in applying general anti-avoidance provisions in the area of revenue law should be undertaken with great care.”

Paper Presentation

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