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The Honourable Murray Gleeson AC

Statutory Interpretation

created by a taxpayer, reinforces the general proposition. The Australian response to the problem of tax avoidance has not been to rely on doctrines such as fiscal nullity, or attempts to misapply the concept of sham (which has a reasonably precise legal meaning) by employing it as a descriptor of a transaction intended to have a legal effect designed to attract fiscal consequences. A sham transaction is one that is not intended to have legal effect according to its tenor; the word does not apply to all transactions designed to produce a favourable tax result. If the word sham had the latter meaning, Pt IVA would be unnecessary, and its scheme would be undermined.4

Before referring to some principles of statutory interpretation and their relevance to revenue law, it is convenient to mention, in order to put it to one side, an approach that once was fashionable, but no longer commands judicial acceptance. It is possible to find in some judicial statements of former times, and even as recently as the third quarter of the 20th century, the proposition that a taxing Act interferes with rights of property, and therefore should be construed narrowly and in favour of the taxpayer. That proposition was normally qualified by a disavowal of some special rule for revenue laws, but it reflected what Lord Devlin, writing extra-judicially, described as a judicial philosophy that was “highly suspicious of taxation”.5 For example, in 1945, in Scott v Russell,6 Viscount Simon in the House of Lords said that the language of a certain United Kingdom rule was obscure and difficult to expound and “the taxpayer is entitled to demand that his liability to a higher charge should be made out with reasonable clearness before he is adversely affected”. That passage was cited with approval by the Privy Council in a 1964 case.7 Viscount Simon averred that he





See Raftland Pty Ltd v Federal Commissioner of Taxation [2008] HCA 21; (2008) 82 ALJR 934. Devlin, “Judges and Lawmakers” (1976) 39 Modern Law Review 1 at 13-14. (1945) 3 T.C. 375 at 424. Naranjee v Income Tax Commissioner [1964] AC 1238 at 1250-1251.

© The Honourable Murray Gleeson AC, Chief Justice of New South Wales 1988-1998, Chief Justice of Australia 1998-2008


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