Interpreting tax treaties : the importance of post-treaty commentary to the OECD Model Tax Convention for achieving uniformity and ensuring the success of the new international tax order

Despite the fact that courts worldwide construe tax treaties in a more liberal manner than domestic legislation and, as an aid to interpretation commonly turn to the Commentary which explains the operation of the various articles of the OECD Model Tax Convention on which many tax treaties are modelled, this article finds the application of the Commentary by Australian superior courts to be highly problematic. As will appear, the narrow, strictly literal construction of tax treaty terms and the minor significance ascribed to the OECD Commentary expounding taxation of hybrid entities and double tax relief, frustrates treaty purpose and is akin to treaty override that could well threaten the success of multilateral efforts to promote tax certainty and tackle base erosion and profit shifting by multinational enterprises. To better promote uniformity and the new international tax order, this article advocates for the adoption of either the nuanced Canadian approach or the pragmatic UK approach for the use of post-treaty Commentary.