The relevance of the OECD Model Conventions and Commentaries for the interpretation of New Zealand tax treaties

Introduction

New Zealand was not one of the founding members of the OECD (or its precedingorganization, the Organisation for European Economic Co-operation (OEEC)) andthus was not a party to any deliberations concerning the drafting of model taxconventions until after it joined the OECD in 1973. Until its accession to theOECD, its treaty network was limited to only six treaties. It waited until therelease of the 1977 OECD Model Convention and then started extending its treatynetwork to other OECD Members, first with Germany in 1978 following thenon-binding recommendation of the OECD for Member countries to negotiatetreaties with each other.

After its accession to the OECD, the New Zealand Parliament did not enact anylaws which incorporated any part of the OECD Model Tax Convention on Income andon Capital (OECD Model) or its Commentaries into domestic law, which remains thecase today. New Zealand, however, is a signatory to the Vienna Convention on theLaw of Treaties (Vienna Convention), which was ratified by Parliament in1971.

There have been a limited number of cases considered by New Zealand courts whichinvolve the interpretation and application of treaties. In Commissionerof Inland Revenue (CIR) v. United Dominions Trust Ltd, McCarthy Pnoted that where treaties were incorporated into domestic law by legislation (asoccurs with treaties in New Zealand) there was some grounds for concluding ‘thatEnglish Courts do not interpret a treaty solely in the light of doctrinespeculiar to English law, but attempt to construe it as a whole, taking intoaccount its object and purpose, in an endeavour to give effect to the expressedintentions of its framers’