Foundations of Taxation Law

Tax avoidance is one of the most controversial and widely debated topics in taxation law. This chapter examines the concept of tax avoidance and distinguishes it from the concepts of tax evasion and tax planning with which it is sometimes confused. It also discusses various judicial and legislative responses to tax avoidance. In particular, it focuses on the specific anti-avoidance provisions in div 6A of pt III ITAA36 and pt 2-42 ITAA97, which have been enacted to address certain income alienation schemes designed to divert income from taxpayers who are subject to high rates of tax to their associates (eg family members and related entities) who are subject to lower rates of tax. It also discusses service entity arrangements, which have been used by some professional firms to split income.