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11.2.87
case which has been given wide publicity in professional
circles. Briefly, these arrangements seek to convert an
income flow, such as interest on a loan which is
assessable to Profits Tax, into a non-taxable capital
receipt by assigning the income flow to another person
without assigning the underlying asset. The arrangements
may also involve efforts to give income an off-shore
source.
138.
It is possible that the general anti-avoidance
provisions introduced last year may be effective in
negating the tax benefit sought from these arrangements.
Certainly, the Commissioner of Inland Revenue will
challenge cases where he considers that the purpose of any
arrangement falls within the terms of the general
anti-avoidance provisions.
However, because the amount of
revenue capable of being put at risk is so large and since
it has always been the Government's policy to implement
specific legislation to counter specific tax-avoidance
schemes, I propose, subject to the advice of the Executive
Council, to introduce legislation aimed specifically at
these asset refinancing arrangements.
I further propose
that such legislation should apply to arrangements entered
into after today.
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