n Comparative and International Law Journal of Southern Africa - Factors that limit the efficacy of general anti-avoidance rules in income tax legislation : lessons from South Africa, Australia, and Canada

Volume 47, Issue 3
  • ISSN : 0010-4051



General anti-avoidance rules (GAARs) are rules in income tax legislation intended to curtail impermissible tax avoidance. GAARs have another critical function, namely informing taxpayers of the limits of permissible tax avoidance. A GAAR is therefore an important provision which must be effective. A study of the historical and current experience with GAARs in South Africa, Canada, and Australia, however, shows that the efficacy of GAARs is limited. The GAARs of the countries studied show some similarities but also some fundamental differences. In spite of these differences, certain common factors working against the efficacy of these GAARs can be identified. It is argued that these factors entail the inherent weakness of GAARs, controversial indicators of impermissible tax avoidance, uncertainty, the role of the judiciary, taxpayer aggression, and the limitations of the law as a weapon against impermissible tax avoidance. Admittedly, some of these limiting factors are difficult to overcome. For instance, a precise definition of impermissible tax avoidance has proved elusive and this status quo is likely to persist. Nevertheless, it is argued that these factors need to be acknowledged and addressed in order to create more effective GAARs in future.

Loading full text...

Full text loading...


Article metrics loading...


This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error