Speaking at the 32nd National Convention of The Tax Institute this week, the Hon Justice John Logan RFD labelled Part IVA - Schemes to Reduce Income Tax as prescriptive and questioned its role in the Income Tax Assessment Act 1936.
Justice Logan RFD pondered whether alternatives may be just as useful in addressing the question of tax avoidance.
He went on to suggest a potential repeal of Part IVA, which could be replaced by a doctrine of sham or the principle of fiscal nullity, which are used in other jurisdictions.
“For the avoidance of doubt, it is hereby declared that the United States doctrine known as judicial sham and the United Kingdom principle known as fiscal nullity apply to the construction and application of this Act,” Judge Logan RFD said.
“The position would remain that it is unnecessary to have regard to any anti-avoidance measure, doctrine or principle to deal with a transaction which no party to it intends to be genuine.”
He continued, “There is not a single Part IVA case to date which would have been decided any differently had the facts fallen for determination by the application of either the judicial sham doctrine or the fiscal nullity principle by virtue of the application of the substitution provision I have set out.”