In 1999, the Australian Government, led by Prime Minister John Howard, introduced "A New Tax System (Goods and Services Tax) Act 1999" into Parliament. By this act, Australia's new Goods and Services Tax (GST) was created. It is administered and enforced through the Australian Taxation Office. The ATO is led by a Commissioner who implements taxation justice to all Australian residents.
Chapter 4, Part 4-7, Division 165 of the legislation is concerned with anti-avoidance. "Avoidance" refers to an abuse of Tax Law to avoid paying taxes, particularly by corporations or organisations; tax evasion, if you will, on a grander scale. "Anti-avoidance" refers to the measures taken to prevent it. Anti-avoidance legislation is often written with specific situations in mind, and many countries have absurd numbers of anti-avoidance provisions.
When writing Division 165, the Australian Government sought to create a broad-based, blanket rule that would cover all instances of tax avoidance and prevent taxpayers from taking advantage of the new GST laws. This rule is known as a general anti-avoidance rule (GAAR).
The Division, and its highly unusual language, was decried by many organisations as being too general.
Following is an excerpt from the legislation. Read carefully:
Chapter 4 - The special rules
Part 4-7 - Special rules mainly about returns, payments and refunds
The special rules in this Part mainly modify the operation of Part 2-7, but they may affect other Parts of Chapter 2 in minor ways.
Division 165 - Anti-avoidance
Subdivision 165-B - Commissioner may negate effects of schemes for GST benefits
165-55 Commissioner may disregard scheme in making declarations
165-55 For the purposes of making a declaration under this Subdivision, the Commissioner may:
treat a particular event that actually happened as:
- treat a particular event that actually happened as not having happened; and
- treat a particular event that did not actually happen as having happened and, if appropriate, treat the event as:
- having happened at a particular time; and
- having involved particular action by a particular entity; and
- having happened at a time different from the time it actually happened; or
- having involved particular action by a particular entity (whether or not the event actually involved any action by that entity).
For the purposes of verification, this piece of legislation may be found in the Australian Tax Office Legal Database, at
It was first drawn to my attention by Dr Karl Kruszelnicki and Adam Spencer during the SleekGeeks Science Tour of Australia.