Horton's lesson: Australia's struggle with ‘truth in drafting’

Abstract

The Federal Court of Australia has ruled that the Australian GST legislation was ‘drafted in a way which in many respects differs from comparable legislation in other jurisdictions'. Some of the differences are illustrated in the Australian decision of Travelex Ltd v Commissioner of Taxation, which is a useful case study of the Australian legislature's approach to the fundamental concepts in a value-added tax of (a) exemption of financial supplies, (b) exported services and (c) the conditions for input tax relief. While the Australian choice of drafting seems to have been deliberate, one is left with the question ‘is that what the legislature meant?’ The Australian experience contains lessons for jurisdictions that might consider adopting a value-added tax or changing existing provisions dealing with cross border transactions, financial services or input tax relief—other countries' VAT law does not always mean what it says and say what it means. It also illustrates that, in seeking to improve legislation by being different and modern in language, you might end up being different in substance. Staying with the old, cumbersome language can give more clarity of meaning—strange but true!