22Arrangements etc. to avoid operation of Act

##### 22 Arrangements etc. to avoid operation of Act (1) Where: (a) a scheme entered into or carried out by a person after 25 July 1982 would, but for this section, have the effect of in any way, directly or indirectly, defeating, evading or avoiding any liability of the person to pay recoupment tax; and (b) it would be reasonable to conclude or infer that the person entered into or carried out the scheme for the purpose of in any way, directly or indirectly, defeating, evading or avoiding any liability of the person to pay recoupment tax or future recoupment tax; then, in any prescribed recovery proceedings, the scheme shall be treated as being void in so far as it would, but for this section, have the effect mentioned in paragraph (a) but without prejudice to such validity as the scheme may have for any other purpose. (2) Without limiting the generality of subsection (1), where: (a) a person (in this subsection referred to as the taxpayer) is liable to pay an amount of recoupment tax to the Commissioner; (b) after 25 July 1982, the taxpayer has transferred or transfers property to another person; (c) the transfer would, but for this section, have the effect of rendering the taxpayer unable to pay the recoupment tax, or any part of the recoupment tax; (d) having regard to: (i) the manner and circumstances in which the transfer was made; (ii) the nature of any connection (whether of a business, family or other nature) between the taxpayer and the other person referred to in paragraph (b); and (iii) any other relevant circumstances; it would be reasonable to conclude or infer that the transfer was made by the taxpayer for the purpose of rendering the taxpayer unable to pay the recoupment tax, a part of the recoupment tax or any future recoupment tax; and (e) either of the following conditions is satisfied: (i) the transfer was made by way of gift; or (ii) having regard to the circumstances referred to in paragraph (d), it would be reasonable to conclude or infer that the person to whom the property was transferred believed or suspected that the transfer was made by the taxpayer for the purpose referred to in paragraph (d); then, in any prescribed recovery proceedings, the transfer shall be treated as being void in so far as it would, but for this section, have the effect mentioned in paragraph (c) but without prejudice to such validity as the transfer may have for any other purpose. (3) A reference in this section to a scheme being entered into or carried out or a transfer of property being made by a person for a particular purpose shall be read as including a reference to the scheme being entered into or carried out or the transfer being made, as the case may be, by the person for 2 or more purposes of which that particular purpose is the dominant purpose. (4) In this section: (a) a reference to a transfer of property by a person includes a reference to: (i) the execution by the person of a charge on property of the person in favour of another person; (ii) the incurring by the person of an obligation in favour of another person; and (iii) any scheme that has the effect, directly or indirectly, of diminishing the value of any property of the person and increasing the value of the property of another person or persons; and (b) a reference, in relation to a transfer of property to which paragraph (a) applies, to the person to whom the property was transferred is a reference to: (i) in a case to which subparagraph (a)(i) applies—the person in whose favour the charge referred to in that subparagraph was executed; (ii) in a case to which subparagraph (a)(ii) applies—the person in whose favour the obligation referred to in that subparagraph was incurred; and (iii) in a case to which subparagraph (a)(iii) applies—the person, or any of the persons, referred to in that paragraph the value of whose property was increased by reason of the transfer. (5) A reference in subsection (4) to a scheme that has the effect, directly or indirectly, of increasing the value of the property of a person includes a reference to a scheme that has the effect, directly or indirectly, that the person becomes the owner of property of which the person would not have been the owner but for the scheme, whether or not the property would have existed but for the scheme. (6) In this section: > future recoupment tax, in relation to a person in relation to a scheme, means recoupment tax that could reasonably have been expected by the person at the time when the scheme was entered into or carried out to become payable by the person after that time. > prescribed recovery proceedings, in relation to recoupment tax, means: (a) proceedings by the Commissioner or a Deputy Commissioner for recovery of the recoupment tax or part of the recoupment tax or of an amount that includes the recoupment tax or part of the recoupment tax; (b) proceedings for enforcement of a judgment given in proceedings referred to in paragraph (a); or (c) proceedings by a trustee within the meaning of the Bankruptcy Act 1966 or by a liquidator, being proceedings for the benefit of the Crown, the Commissioner or a Deputy Commissioner or for the benefit of persons including the Crown, the Commissioner or a Deputy Commissioner. > recoupment tax includes late payment tax.