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Technical tax area Ngā tūmomo whakataunga me ngā aratohu

List of cases

In this section you will find brief notes of decisions made by the Taxation Review Authority, the High Court, Court of Appeal, Privy Council and the Supreme Court. These case notes do not set out Inland Revenue policy, nor do they represent our attitude to the decision.

Title Decision date Case Appeal status

Proceedings struck out for exceeding jurisdiction

31 March 2006

Graham Ashley Robert Palmer v The Commissioner of Inland Revenue

The District Court struck out causes of action 3,4,5 & 6 of the Taxpayer's Statement of Claim under the proviso to section 44 District Courts Act 1947 as the aggregate of the causes of action in the proceeding exceeded the District Court' jurisdiction of $200,000 and the Taxpayer knew his claim exceeded the jurisdiction. Not appealed.

Application for recall

30 March 2006

Clarence John Faloon v The Commissioner of Inland Revenue

The Taxpayer sought an order recalling a prior High Court judgment of Asher J. The taxpayer essentially re-litigated his complaints contained in his Statement of Claim from Asher J's prior judgment. Referring to the leading case on recall of Wild CJ in Wild CJ in Horowhenua County v Nash (No 2) [1968] NZLR 632, Asher J found that there was no proper basis in which the taxpayer can recall the judgment. Not appealed.

Taxpayer unsuccessful in attempt to compel Commissioner to accept and allow late objection

22 March 2006

FB Duvall v The Commissioner of Inland Revenue

Neither the taxpayer nor the TRA could determine an objection for the Commissioner, regardless of the delay in determining the objection. Appealed.

LAQC losses must be attributed

21 March 2006

New Zealand Ostrich Export Company Limited v The Commissioner of Inland Revenue

All losses incurred by an LAQC must be attributed. The net loss for attribution cannot be partly reduced by an offset against the income of a profit company under the loss offset provisions. Appealed.

Valuation and hindsight

01 May 2006

TRA Number 145/04, Decision Number 006/2006

When a purported valuation is subject to review, evidence of events that have occurred post that valuation date can be relied upon to help determine whether a valuation made was reasonable and justified at the time. Not appealed.

Trust debts provable in bankruptcy of trustee

07 July 2006

Commissioner of Inland Revenue v Philip John Duncan

A trustee who incurs an obligation to a finance house to develop and sell a property prior to being bankrupted is not liable for GST that he incurs on behalf of the trust as a result of the sales after the date of bankruptcy. The debt is provable in his bankrupt estate in terms of section 87(1) of the Insolvency Act 1987 (the Act). Appealed.

Taxpayer successfully opposes Commissioner's application to adduce new evidence

03 May 2006

TRA003/003 Decision Number 7/2006

The Commissioner was unsuccessful in his attempt, under section 138G(2) TAA, to adduce new evidence which section 138G(1) excluded. Not appealed.

Supreme Court dismisses application for leave to appeal

02 August 2006

Jeffrey George Lopas and Lorraine Elizabeth McHerron v The Commissioner of Inland Revenue SC 2/2006 [2006] NZSC 56

The applicants were unsuccessful in their appeal to the Court of Appeal, and sought leave to appeal to the Supreme Court. The first issue in dispute was whether the proviso to s. 51(1) of the GST Act 1986 is incorporated into s. 52(1). The second issue was whether the Commissioner's second argument in the Court of Appeal that the applicants were not eligible for deregistration was recorded in the Statement of Position. Appealed.

Strike-out application

19 December 2006

J A Reid & Others v The Commissioner of Inland Revenue

The plaintiff alleged misfeasance in public office against the Commissioner in relation to the tax investigation and Serious Fraud Office referral of the plaintiff's investment scheme. Not appealed.

Solicitor's undertaking

20 December 2006

Manu Chhotubhai Bhanabhai & Douglas Mark Andrew Burgess v The Commissioner of Inland Revenue

The Court of Appeal upheld the High Court decision that Mr Bhanabhai had breached the undertaking given and the amount of the compensation awarded was upheld. Appealed.

Section 17 notice served upon a liquidator

15 February 2006

Re: Next Generation Investments Ltd (in liq) v The Commissioner of Inland Revenue (Judicial Review)

The Commissioner may employ section 17 notices during the liquidation of a company even though he is a creditor of the company. Section 17 prevails over section 256 Companies Act 1993 ("CA"). A as long as the Commissioner's status as a creditor is merely incidental to the subject matter of the notice. Not appealed.

Over-market payments to a related person in the course of business

08 November 2006

TRA Decision Number 15/2007

The disputant had entered into an arrangement to pay an above-market income to an administration assistant provided by a related company. As that company had significant carry-forward losses, a significant tax advantage accrued to the disputant. This was held to be so by the Taxation Review Authority ("TRA"). Not appealed.

Order for further and better discovery

24 February 2006

Prophet Investments Limited

The Commissioner considered the list of documents prepared by the plaintiff was deficient and made an application for further and better discovery, which was granted. Not appealed.

New ground of assessment on appeal

23 May 2006

The Commissioner of Inland Revenue v Zentrum Holdings Ltd

In circumstances where the evidence exclusion rule did not apply the Commissioner was held to be allowed to raise a ground to justify an assessment on appeal which had not been included in the Notice of Proposed Adjustment or raised in the Taxation Review Authority. Appealed.

High Court substantially upholds validity of Section 17 Notice issued to taxpayer

22 December 2006

Lupton v CIR

Section 17 does not authorise the Commissioner to require a person, other than the person named in the notice to vouch for the correctness of the information given. Not appealed.

High Court discusses Commissioner's ability to settle tax litigation

13 February 2006

Accent Management Limited & Ors v The Commissioner of Inland Revenue

The plaintiffs made two applications. The first was that Venning J disqualify himself from hearing the non-party costs award against Dr Muir, and also that he should not have heard the substantive case. The second was an application that the substantive Trinity scheme judgment be recalled. Both applications were refused. This summary only considers the recall application. Not appealed.

GST paid on deposit

09 June 2006

TRA No. 018/05, Decision No. 8/2006

The Commissioner sought to counteract the tax advantage by disallowing the refunds claimed by the 0 disputants. To permit these refunds would be to allow the disputants to benefit from an arrangement designed to defeat the intent and application of the GST Act. Therefore, the scheme in this case was void against the Commissioner pursuant to section 76. Not appealed.

GST avoidance arrangement unsuccessful

08 August 2006

TRA04/2005 Decision Number 9/2006

A case similar to Ch'elle Properties where the taxpayer obtained GST refunds on the purchase of real estate on very long settlement terms. Ch'elle Properties was not directly applied to the arrangement but was influential and a Shortfall Penalty confirmed. Not appealed.

Disputing default assessments

30 March 2006

Donald Eugene Allen v The Commissioner of Inland Revenue

To dispute and then challenge a "default" assessment a taxpayer must file the outstanding return and a NOPA within the response time. Appealed.

Counterclaim action during liquidation proceedings

31 October 2006

The Commissioner of Inland Revenue v Churton Farms Limited. The Commissioner of Inland Revenue v Ngaturi Properties Limited

During the course of liquidation proceedings Rule 146 of the High Court Rules prevents a defence from being raised on the ground of counterclaim or set-off once the liquidation proceeding is issued. Not appealed.

Commissioner directed to consider remission of penalties and interest

15 December 2006

Chesterfields Pre-Schools Limited and Other v The Commissioner of Inland Revenue

The taxpayer obtained directions against the Commissioner regarding aspects of their tax affairs. Not appealed.

Casual relief driver is employee

10 January 2006

TRA 003/05 Decision No 001/2006

The TRA found that the relief courier drirver was a casual employee of the disputant. The disputant was therefore responsible for the PAYE. Not appealed.

Appeal filed out of time deemed abandoned

28 February 2006

J G Russell v The Commissioner of Inland Revenue

The Court of Appeal accepted that an appeal deemed abandoned by the Court of Appeal Rules was not dismissed. It declined to use its resources accepting an appeal by the taxpayer where that appeal was filed out of time and the substantive dispute was not a real controversy. Not appealed.


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Note: We are currently converting historical case notes into HTML format. If you are looking for case notes that are not published here you may find them by referring to the Tax Information Bulletin.