Analysis of misuse and abuse in terms of the South African general anti-avoidance rule : lessons from Canada
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Date
Authors
Kujinga, Benjamin T.
Journal Title
Journal ISSN
Volume Title
Publisher
Institute for Foreign and Comparative Law, UNISA
Abstract
In terms of the South African general anti-avoidance rule, a transaction that
misuses or abuses the provisions of the Income Tax Act may be disregarded
for tax purposes. The misuse or abuse provision, along with the general antiavoidance
rule (GAAR), has not yet been judicially considered. It is argued
that the provision brings further uncertainty and breadth to the general antiavoidance
rule. It calls for a purposive interpretation of tax legislation. This
approach, however, creates uncertainty regarding the determination of
purpose. In Canada, from which the provision was borrowed, the courts
initially applied a policy approach in determining purpose but this
disadvantaged the revenue authorities in a series of cases. The Minister of
National Revenue was required to present a clear and unambiguous policy
which in reality could not be found. The thrust of this article is to show that
the misuse or abuse concept could turn out to be a lateral development in the
South African GAAR because of the uncertainty it carries and if lessons on
its application are not learned from the Canadian experience.
Description
Keywords
South African general anti-avoidance rule, Misuse and abuse, Income Tax Act
Sustainable Development Goals
Citation
Kujinga, BT 2012, 'Analysis of misuse and abuse in terms of the South African general anti-avoidance rule : lessons from Canada', Comparative and International Law Journal of Southern Africa, vol. 45, no. 1, pp. 42-63.