8Tax avoidance schemes made ineffective

8 Tax avoidance schemes made ineffective (1) If the commissioner is satisfied that a person has used a tax avoidance scheme, the commissioner may— (a) determine the tax to which the person and other people would have been liable apart from the use of the scheme; and (b) take the action that the commissioner considers necessary to allow assessments of tax so determined. Note The commissioner’s decision in relation to a tax avoidance scheme used by a person is an internally reviewable decision (see s 107, def internally (2) If the commissioner makes a determination under subsection (1), each person benefiting from the scheme is liable for tax in accordance with the determination. (3) This section applies in relation to a scheme wherever and whenever entered into. (4) This section does not prevent a person from agreeing to pay tax payable by another or from entering a tax-sharing agreement. scheme includes— (a) any plan, action or conduct of a person; and (b) any trust, agreement, arrangement or other understanding between people, whether oral or in writing, whether express or implied and whether or not it is intended to be legally binding; and (c) any series or combination of schemes mentioned in paragraphs (a) and (b). tax avoidance scheme means a scheme by which a person obtains or seeks to obtain a reduction in, or exemption from, tax that would otherwise be payable and where, having regard to— (a) the way in which the scheme was entered into or carried out; or (b) the form and substance of the scheme; or (c) the time when the scheme was entered into and the length of time during which it was carried out; or (d) the extent to which the scheme reduces the tax that would otherwise be payable; or (e) whether the scheme has resulted in, or can reasonably be expected to result in, a change in any person’s financial position, or in any other consequence for any person; or (f) the nature of any connection (whether of a business, family or any other nature) between the person and a person mentioned in paragraph (e); it would be reasonable to conclude that the person entered into or carried out the scheme principally for the purpose of obtaining the reduction in, or exemption from, tax.