Legal decisions - case notes: Case notes 2011
Case notes 2011
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 |
20 December 2011 |
Tannadyce Investments Limited v Commissioner of Inland Revenue |
The Supreme Court held that only in exceptional cases can a judicial review be permitted to reverse tax assessments. Not Appealed |
|
Judicial review of Commissioner's refusal to accept amended GST returns |
15 December 2011 |
FB Duvall Limited & Ors v Commissioner of Inland Revenue |
The Court ordered the Commissioner of Inland Revenue to reconsider his decision to not allow the taxpayers to amend their GST returns to exclude previously returned output tax and therefore obtain a GST refund. Not Appealed |
Appropriate course for dealing with an allegation that the High Court was functus officio |
14 December 2011 |
Redcliffe Forestry Venture Limited & Ors v Commissioner of Inland Revenue |
This decision concerned the appropriate course to take when the High Court is confronted with an allegation that the High Court was functus officio and thus lacked the jurisdiction to hear and determine the proceedings. Appealed |
Optional convertible notes can be tax avoidance arrangements |
12 December 2011 |
Alesco New Zealand Ltd and Ors v Commissioner of Inland Revenue |
The Court held that the use of particular optional convertible notes (OCNs) was a tax avoidance arrangement because the arrangement was an artificial device and it was not within Parliamentary contemplation. Appealed |
Application for leave to appeal to Supreme Court by administrator dismissed |
30 November 2011 |
Damien Grant & Steven Khov v Commissioner of Inland Revenue |
The Supreme Court confirmed that a casting vote in voluntary administrations can only be used to break a deadlock in number. |
16 November 2011 |
Commissioner of Inland Revenue v Giovanni Holdings Ltd and Ors |
The Court considered that the freezing order could not be upheld without more evidence and an undertaking by the Commissioner. Appealed |
|
10 November 2011 |
The Harsono Family Trust v Commissioner of Inland Revenue |
The Court had no jurisdiction to consider the Harsono Family Trust's ("HFT") claim, nor was it tenable. Furthermore, the claim brought by HFT against the Commissioner of Inland Revenue was found to be an abuse of process because HFT deliberately attempted to misconstrue the true nature of the payment. Appealed |
|
8 November 2011 |
Clarence John Faloon v Commissioner of Inland Revenue |
Since the taxpayer's proceeding was of the same nature as others that have been unsuccessful it was found to be abuse of court process. Not Appealed |
|
25 October 2011 |
Heather Anne Jacobs-Maxwell v Commissioner of Inland Revenue |
The usual dispute resolution procedures under Part 4A of the Tax Administration Act 1994 ("TAA") (including deemed acceptance under section 89H(2)) do not apply to a late Notice of Proposed Adjustment (NOPA) where no "exceptional circumstance" is raised in accordance with section 89K. Appealed |
|
21 October 2011 |
Tepe Holdings Ltd v Commissioner of Inland Revenue |
The Court of Appeal rejected an appeal against the decision of the High Court that the sale of the property by the taxpayer was a sale of shares. Appealed |
|
7 October 2011 |
BHL v Commissioner of Inland Revenue |
The group loss offset provisions require that for a person to have a voting interest, their shares must be registered on the company's share register. Appeal abandoned |
|
5 October 2011 |
Junior Farms Ltd v Commissioner of Inland Revenue |
A taxpayer's application for increased costs based on its Calderbank offer failed because its rejection was justified. Not Appealed |
|
Commissioner's decision to decline instalment arrangement upheld |
3 October 2011 |
Priscilla Anne Kea v Commissioner of Inland Revenue |
The Court held that it would have been wrong for it to grant a remedy to the plaintiff (even if a reviewable error had been made) because the plaintiff misrepresented her position and the facts upon which the instalment arrangement proposal relied were no longer applicable. The Court further held that the Commissioner had taken into account relevant factors and that his decision to decline the plaintiff's instalment arrangement proposal was not unreasonable or irrational. Not Appealed |
30 September 2011 |
W v Commissioner of Inland Revenue |
The Taxation Review Authority (TRA) determined that the taxpayer who had been working in Fiji for about four years was a tax resident of New Zealand. Not Appealed |
|
29 September 2011 |
Hanh Duc Nguyen v Commissioner of Inland Revenue |
The High Court dismissed the taxpayer's judicial review proceedings as the taxpayer failed to show that when making the default assessments the Commissioner could not have exercised a genuine and honest judgment, and that the Commissioner erred in considering the exercise of his discretionary powers to amend the assessments under section 113 of the Tax Administration Act 1994 ("TAA"). Not Appealed |
|
Commissioner unsuccessful against appeal of his strike-out application |
28 September 2011 |
John David Hardie v Commissioner of Inland Revenue |
The Court of Appeal allowed the appeal by Mr Hardie and the order striking out the application for judicial review by the High Court was set aside. |
Taxpayer's attempt to consolidate two separate proceedings fails |
16 September 2011 |
Yandina Investments Limited v Commissioner of Inland Revenue |
The taxpayer sought to consolidate (into a single hearing) two separate matters, a tax matter and the taxpayer's attempt to recover funds from a third party. The High Court declined to order the consolidation. Not Appealed |
Taxpayer's application for leave to appeal to the Supreme Court declined |
26 August 2011 |
J G Russell v TRA & Commissioner of Inland Revenue |
The taxpayer was declined leave to appeal to the Supreme Court as any potential bias had been cured - on these facts - by the taxpayer's exercise of appeal rights from the allegedly biased judicial officer at the Taxation Review Authority (TRA). |
24 August 2011 |
Penny and Hooper v Commissioner of Inland Revenue |
Two surgeons who used companies and trusts to divert what was previously personal income were held by the Supreme Court to have avoided tax under section BG 1 of the Income Tax Act 1994 ("ITA"). The structures they used were of themselves legitimate, but they were used in conjunction with artificially low salaries, paid to the surgeons personally, which amounted to tax avoidance. No right of appeal exists |
|
22 August 2011 |
Lewis Gaire Herdman Thompson v Commissioner of Inland Revenue |
The Supreme Court has granted the appellant leave to appeal. No right of Appeal exists |
|
15 August 2011 |
Damien Grant & Steven Khov v Commissioner of Inland Revenue |
A casting vote can only be used to break a deadlock between a number of creditors for or against a Deed of Company Arrangement ("DOCA"). It cannot be used to overcome a shortfall in support from the creditors representing 75% of the company's total debt. Furthermore any DOCA which does not take into account the Commissioner's preferential debt in liquidation may be terminated by the Courts. Application for Leave to Appeal filed |
|
12 August 2011 |
Tauber & Ors v Commissioner of Inland Revenue |
Judicial review proceedings were filed by the applicants challenging the lawfulness and reasonableness of search and seizure operations undertaken by the Commissioner, pursuant to section 16 of the Tax Administration Act 1994 ("TAA"), on a number of business premises and private residences. Case under Appeal |
|
5 August 2011 |
Chesterfields et al v Commissioner of Inland Revenue |
The Commissioner was only successful in part in attempting to strike out the taxpayer's claim of misfeasance in public office by the Commissioner. Appealed |
|
5 August 2011 |
VI Limited and WI Limited v Commissioner of Inland Revenue |
Taxpayer WI Limited ("WIL") is a Hong Kong resident company. It incorporated a company VI Limited ("VIL") in New Zealand. WIL made substantial loans to VIL which were converted to redeemable preference shares in VIL. The Commissioner asserted that WIL was a New Zealand tax resident and accordingly should have resident withholding tax (RWT) as opposed to payment of an approved issuer levy (AIL). The Commissioner also asserted that the structure had a purpose or effect of avoiding non-resident withholding tax (NRWT) as tax avoidance. The Taxation Review Authority (TRA) found in favour of the Commissioner on issues 1 to 4 but concluded that a shortfall penalty did not apply. Case under Appeal |
|
28 July 2011 |
Commissioner of Inland Revenue v Giovanni Holdings Ltd and Ors |
||
26 July 2011 |
Irene Yeh Leng Goh v Commissioner of Inland Revenue |
A taxpayer's claim of tax credit against the Commissioner resulting from tax paid on compensation by the Accident Compensation Corporation ("ACC") was struck out for being untenable and for abuse of process. Not Appealed |
|
A buy-back of part of a property is not "acquisition" under section CD 1(2)(a) |
22 July 2011 |
Junior Farms Ltd v Commissioner of Inland Revenue |
The Court held that a sale arrangement of the property which included a buy-back of part of it for resale was not an "acquisition" for purposes of section CD 1(2)(a) of the Income Tax Act 1994. Not Appealed |
Court declines leave to amend claim after judgment delivered |
11 July 2011 |
Dunphy & Ors v Commissioner of Inland Revenue |
An applicant unsuccessfully applied for leave to amend his claim after the judgment granting judicial review had been delivered and after the applicant and the Commissioner had settled all matters in relation to the proceeding. Not Appealed |
8 July 2011 |
NTH Douglas and Others v Commissioner of Inland Revenue |
Justice Courtney considered the purpose of the “slip rule” was to correct errors but that it was not to be lightly invoked as it would weaken the finality of a judgment and was not used in this instance. No right of Appeal exists |
|
Commissioner granted leave to appeal trustee company liquidation case |
23 June 2011 |
Commissioner of Inland Revenue v Newmarket Trustees Ltd (application for leave to appeal) |
The Commissioner successfully applied to the Court of Appeal for an extension of time to appeal a decision by the High Court not to liquidate Newmarket Trustees Limited, a trustee company. Case under Appeal |
16 June 2011 |
TRA 42/03, 105/04, 23/05, 54/05 and 38/07 [2011] NZTRA 6 |
The disputant was not successful in the recall application. Due to an appeal having being lodged by the disputant, the Taxation Review Authority "TRA" is functus officio. Further, the decision relied upon by the disputant to justify the recall application was irrelevant. Case under Appeal |
|
17 May 2011 |
Simpson and Downes as receivers of Capital + Merchants Investments Ltd (in receivership) v Commissioner of Inland Revenue |
Messrs Simpson and Downes, as receivers of Capital + Merchants Investments Ltd (in receivership), were personally liable to account to the Commissioner for the output tax on mortgagee sales. Case under Appeal |
|
Exceptional circumstances examined by the Taxation Review Authority |
28 April 2011 |
TRA 27/08; TRA 28/08; TRA 53/08 [2011] NZTRA 05 |
The Taxation Review Authority ("TRA") considered there were arguable exceptional circumstances that existed in respect of late served Points of Objection Notices but sought further evidence prior to deciding the application for an extension of time. Case under Appeal |
Bias appeal dismissed on the basis of cause of action estoppel |
19 April 2011 |
John George Russell v Commissioner of Inland Revenue |
An appeal from the High Court for judicial review of the Taxation Review Authority has been dismissed on the basis of cause of action estoppel and any possible bias was cured by the appeal of the substantive case to the High Court. Case under Appeal to the Supreme Court |
Commissioner's application of the serious hardship provisions upheld by the Court of Appeal |
19 April 2011 |
Jillian Claire Larmer v Commissioner of Inland Revenue |
The appeal failed as the Court of Appeal found that the Commissioner correctly applied section 177 of the Tax Administration Act 1994 ("TAA") and contrary to the argument by the taxpayer, had considered the most recent information available to him in applying section 177. Not Appealed |
11 April 2011 |
TRA 37/09 [2011] NZTRA 04 |
There was no acceptance of the disputant's late Notice of Proposed Adjustment ("NOPA") because a valid timely NOPA is a prerequisite to deemed acceptance and the Commissioner had not agreed to accept the disputant's late NOPA.Case under Appeal- Hearing 26 August 2011 |
|
7 April 2011 |
Westpac, BNZ & ANZ v Commissioner of Inland Revenue (unclaimed money) |
The Supreme Court has followed the Privy Council decision in Thomas Cook (New Zealand) Ltd and held that unclaimed foreign exchange drafts and bank cheques are to pass to the Commissioner as custodian six years after legal demand may be made for payment to the payee. It is now clear that bank cheques and foreign currency drafts which remain unclaimed will be treated as unclaimed money under the Unclaimed Money Act 1971. No Appeal right exists |
|
Court of Appeal dismisses taxpayer's appeal in relation to an entitlement to de-register from GST |
5 April 2011 |
Lewis Gaire Herdman Thompson v Commissioner of Inland Revenue |
The Court of Appeal upheld the High Court's decision that the Commissioner was required to make output tax credit adjustments to the Taxpayer's GST returns in the relevant GST return periods. Case under Appeal – Leave granted by Supreme Court |
5 April 2011 |
TRA 19/10 [2011] NZTRA 3 |
A courier did not buy a going concern as the vendor could not supply a going concern. This case turned on the finding that the vendor did not have a contract with the company (MF) capable of being assigned to the disputant. Without that contract there could be no going concern. No Appeal right exists |
|
24 March 2011 |
G J Lupton v Commissioner of Inland Revenue |
The plaintiff was unable to prove that various amounts paid into bank accounts which he controlled were not his income. The Commissioner of Inland Revenue established that the plaintiff was liable for evasion shortfall penalties. Not appealed |
|
High Court finds in favour of retrospective departure orders |
16 March 2011 |
B v X & Commissioner of Inland Revenue |
The non-custodial parent had appealed the findings of the Family Court awarding a departure order from formula assessment in favour of the custodial parent. The non-custodial parent appealed on a number of grounds. The reason the Commissioner intervened in this matter was primarily because of one ground whereby the non-custodial parent argued that there is no jurisdiction for the Commissioner to make retrospective departure orders. Case under Appeal |
7 March 2011 |
Clarence John Faloon v Commissioner of Inland Revenue |
A number of interlocutory applications which attempted to re-open finalised decisions were dismissed by the Court. The decision is further confirmation of the approach the Court will take to persistent re-litigation of previously decided and/or unmeritorious matters. Not appealed |
|
4 February 2011 |
Beacham Holdings Ltd v Commissioner of Inland Revenue |
The Court upheld the Commissioner's complaint that the plaintiff, in its discovery affidavit, had failed to provide sufficient particulars of the steps taken in relation to obtaining potentially relevant documents. As well, the Court ordered the plaintiff to list individually the documents for which it claimed privilege. Not appealed. |
|
1 February 2011 |
XX v CIR |
It was held the assessments made were not prohibited due to the effect of section 114 of the Tax Administration Act 1994 ("TAA"). Furthermore, the assessments were valid due to the presumption of validity and even if there was a technical error, the Taxation Review Authority ("TRA") had jurisdiction to consider the challenge to the assessments. |
|
25 January 2011 |
TRA 37/08 |
The partnership invested in shares overseas and eventually lost all that was invested. The partnership claimed the loss and the partners to the partnership each claimed the deduction. The Commissioner denied the claim. The Taxation Review Authority ("TRA") found the expenditure was on revenue account and deductible. Not appealed. |
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.
Date published: 06 Apr 2011
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