11 Nov 2016
GREAT NORTH MOTOR COMPANY LTD (IN RECEIVERSHIP) v COMMISSIONER OF INLAND REVENUE [2016] NZHC 2708
- Citation
- [2016] NZHC 2708
- Court
- High Court
The Court held the arrangement constituted tax avoidance under the Ben Nevis two-step test: although interest would ordinarily be deductible, the debenture and corporate structure were artificial, circular and lacked commercial reality so the use of the deduction was beyond Parliament's contemplation; Russell knew or was recklessly indifferent to the misleading nature of the returns so they were "wilfully misleading" for s108(2) purposes allowing reassessment; accordingly the Commissioner correctly disallowed the claimed deductions and losses and validly imposed shortfall penalties for an abu…