Questions we've been asked: General issues

Section 108 Tax Administration Act 1994 (TAA) - commencement of four year statutory period (November 2002)

We have been asked to clarify when the four-year statutory period in section 108 of the TAA commences in respect of taxpayers with non-standard balance dates and consequently when the time bar takes effect.

Section 108 of the TAA provides that the Commissioner may not increase the amount assessed if 4 years have passed from the end of the income year in which the taxpayer provides the tax return.

For the purposes of this item, the section 108 of the TAA four-year statutory period will be referred to as the "statutory period". The end of the statutory period will be referred to as "time bar" or "time barred" as context requires.

Income Year

The definition of "income year" is found in section OB 1 of the Income Tax Act 1994 (ITA). The definition refers to the "year" in which income and loss for which a person is assessed for income tax, is allocated. "Year" is defined in section OB 1 of the ITA as a year commencing on 1 April and ending on 31 March. Both these definitions apply to the TAA by virtue of section 3(2) of the TAA.

For the purposes of section 108 of the TAA, income year is a year ending on 31 March.

In the case of a taxpayer with a non-standard balance date, case law confirms that income year for a non-standard balance date taxpayer is a year ending on 31 March. (F. E. Jackson Co. Ltd. v CIR (NZ) 72 ATC 6052; Case K41 (1988) 10 NZTC 348).

Commencement of statutory period

The commencement of the statutory period is determined by the date the taxpayer furnishes the return and not determined by the taxpayer's balance date. Therefore, for a taxpayer with a non-standard balance date, the statutory period begins on 1 April following the date on which the taxpayer provides their return.

As a practical example, a taxpayer's non-standard balance date of 30 September 1999 is deemed to be in respect of the 1998/1999 income year, ie 1 April 1998 to 31 March 1999. If the taxpayer provides their return on 15 January 2000, the statutory period begins on 1 April 2000 and increases to the assessment generally become time barred after 31 March 2004.

Other pages in: General issues

• QB 09/05: Residential investment property or properties in Australia owned by New Zealand resident - NRWT treatment of interest paid to Australian financial institution
• QB 09/03: Decisions on application of CA 1(2) - common law interest and income under ordinary concepts
• QB 09/02: Holiday houses - income tax treatment
• QB 09/01: Payments made in addition to financial redress under Treaty of Waitangi settlements - income tax treatment
• QB 08/04: Income Tax Act 2007: research and development credits (subpart LH) - tax avoidance (section BG1)
• Kiwisaver - creditable membership
• QB 08/03: Application for a private ruling or product ruling on an issue dealt with in a mutual agreement made under a Double Tax Agreement - Tax Administration Act 1994, sections 91E(4)(D)(ii) and 91F(4)(D)
• QB 08/02: Commissioner's power to issue a replacement ruling that operates retrospectively
• QB 08/01: Tax Administration Act 1994 - Section 91E(4)(f) and self-assessment
• QB 07/05 - Ability to rule where the Commissioner is auditing or investigating - whether the Commissioner has a discretion to rule or is prohibited
• QB 07/02 - Whether The Minor Beneficiary Rule Exemption In Section HH 3B Applies On A $1,000 "Per Beneficiary" Or On A $1,000 "Per Beneficiary Per Trust" Basis.
• Tax treatment of wooden scaffolding planks
• Exemption from gift duty for dispositions of property made by or under an order of the Court: section 75(A) Estate and Gift Duties Act 1968
• Private and product binding rulings - to whom do they apply?
• Bankrupt's ability to carry forward accumulated losses
• Records for controlled foreign companies or foreign investment funds to be available in English
• Website expenditure - deductibility
• Qualifying foreign private annuity exemption from the Foreign Investment Fund regime
• Tourism service providers' payments made to tour guides or drivers - the income tax liability of those parties and the tour operator employing the guide or driver
• Managing communications associated with a dispute referred to the Adjudication Unit
• When does derivation occur in relation to land sales with a deferred settlement, by business taxpayers who provide vendor finance?

Date published: 22 Jun 2005

Back to top