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Trending towards convergence


This paper considers the operation of general anti-avoidance rules (‘GAARs’) in similar common law jurisdictions such as Australia, New Zealand, Canada and the United Kingdom to ascertain whether there has been a noted trend of convergence in the way these GAARs operate.

This paper concludes that there has been a noted trend towards convergence as it now appears to be the case that, no matter what the specific wording of the GAAR actually is, the enquiry undertaken by the courts in common law jurisdictions is effectively the same. Relevantly, this enquiry looks to the overall purpose and structure of the transactions at issue and whether they lack any real commercial substance. This conclusion may seem contrary to prevailing attitudes about statutory interpretation, however, the evidence reveals that no matter what specific wording might be adopted in the GAAR, the identification of tax avoidance as involving artificially contrived, complex arrangements that produce no real economic substance, is applied in almost the exact same way across the different jurisdictions reviewed.

This trend towards convergence indicates that the reviewed GAARs operate in largely the same ways. It is, however, acknowledged that whilst the enquiry undertaken is generally the same across the different jurisdictions examined, there are, nevertheless, differences in the outcomes possible due to different thresholds being applied to determine where the line of artificiality and tax avoidance is deemed to exist.


Convergence, General anti-avoidance rules, Transaction rules, Tax avoidance

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