Did New Zealand get it right? : Lessons for the South African GAAR

Abstract

Tax avoidance has various harmful effects, one of which is the loss of revenue for governments. While an effective general anti-avoidance rule (‘GAAR’) may be instrumental in mitigating this risk, there is still uncertainty as to the effectiveness of the current South African GAAR and whether the latest amendments, in 2006, adequately addressed the weaknesses identified in its predecessor. This uncertainty is compounded by the fact that the current South African GAAR has never been subject to judicial enquiry in its entirety. This article seeks to identify potential weaknesses and improvements to the interpretation and application of the South African GAAR through comparison to its New Zealand counterpart.