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The new principal purpose test in anti-avoidance rules
Published on 01 Jun 21 by "THE TAX SPECIALIST" JOURNAL ARTICLE
The principal purpose test (PPT) is a relatively new concept that is found in the Multilateral Instrument (MLI), multinational anti-avoidance law (MAAL), diverted profits tax (DPT) and hybrid integrity rule. The ATO has previously indicated its approach to this test in LCR 2015/2 (MAAL) and LCR 2018/6 (DPT), and more recently in PS LA 2020/2 (MLI) and LCR 2021/1 (hybrid integrity rule). This article compares and contrasts the PPT in its various forms within these rules. The test is also compared to the
general anti-avoidance provisions of Pt IVA of the Income Tax Assessment Act 1936 (Cth). The authors explore how a court might approach a case requiring it to assess the PPT and offer an approach for taxpayers, in light of Pt IVA cases, to establish objective purpose to discharge the taxpayer’s onus of proof on the balance of probabilities, and steps to mitigate the risks of being caught by a PPT.
Author profiles
Jennifer Batrouney AM KC
Jennifer Batrouney AM KC is a silk at the Victorian Bar practising in taxation, commercial, administrative, equity, superannuation and charity law. She was appointed a QC in 2000. She is sought after for her clear and concise advice on charity law and revenue matters throughout Australia. Jennifer is a past President of the Australian Bar Association, the Victorian Bar, the Tax Bar Association and Australian Women Lawyers. She was the founding chair and now sits on the Law Council of Australia Charity Law Committee and is a director of the Charity Law Association of Australia and New Zealand. She sits on the Melbourne Law School Advisory Council and Tax Masters Advisory Board. She is also a Senior Fellow at the Melbourne Law School teaching tax and charity law in the Melbourne Law Masters. Jennifer was appointed a Member of the Order of Australia in 2020 for significant service to the law, the legal profession and women lawyers - Current at 21 March 2023
Khai-Yin Lim CTA
Khai-Yin is a barrister practising in taxation and commercial law. Khai-Yin’s tax expertise is in matters concerning corporations and SMEs in corporate tax, international tax, trust law and indirect taxes. Khai-Yin’s commercial experience includes contracts, director duties, insolvency/bankruptcy, trusts and equity. - Current at 05 December 2024
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