- a self-assessment and penalty regime that makes it important for taxpayers to act reasonably in taking a tax position;
- a formal tax disputes regime that is designed to ensure that Inland Revenue (IR) arrives at a correct statement of liability, but can also 'burn off' taxpayer resistance when IR does not; and
- a pragmatic attitude and approach by the courts to tax issues that makes it more likely that the courts will uphold IR's position in disputed matters.4
New Zealand's tax system is largely based on taxpayer self-assessment. A taxpayer who is required to file a tax5 return is treated when doing so as taking a tax position that quantifies their liability until that position is altered as permitted by law. IR may accept the self-assessed tax position or correct it but, except in certain extreme cases, such as alleged fraud, IR may not reassess a taxpayer outside a four-year time bar6 and without first having undertaken a pre-assessment disputes process, which is comprehensively regulated under the Tax Administration Act 1994 (TAA).7 This means that in most cases IR must have decided to query a tax position, have undertaken any necessary investigation and then carried out the disputes process before being able to assess.
Because of the time pressure this places on IR, in many cases IR invites a solution that avoids the need to apply its resources to a full investigation and formal dispute. Thus, it will often commence its dealings with a taxpayer with a 'risk review'. This is avowedly not the start of an investigation and is usually couched in terms that invite the taxpayer to consider the correctness of its position and to make a voluntary disclosure of anything that might be an error. Voluntary disclosures are encouraged with significant penalty reductions and, if they are made prior to the notification of an audit (the stated effect of a risk review), an greatly reduced likelihood of prosecution for tax crimes.8
Not all cases commence with a risk review or can be resolved by disclosure. An investigation may be commenced. IR has broad powers of investigation, search and seizure.9 They are not the subject of this chapter and fall outside the statutory disputes process. To the extent that the conduct of investigations is subject to judicial review, the very limited ability to challenge an investigation is referred to in Section II.ii.
The disputes process usually follows an investigation by IR, from which it concludes that the taxpayer's position is incorrect. In its full form, the process involves the formal exchange of notices between taxpayer and IR, a conference phase10 and ultimately (unless a taxpayer opts out) the referral of an unresolved dispute to the Disputes Review Unit (DRU) of IR. There, the respective positions of the relevant IR investigations team and the taxpayer are independently considered on the papers, and a decision made as to which prevails.11
The whole process is characterised by firm deadlines, where failure to comply leads to a loss of taxpayer dispute rights. The usual response period under the process is two months. Although it is possible to seek further time to meet the steps that the process requires, the rules for time extensions make these difficult to obtain. This means that formal disputes can sometimes be conducted under extreme time pressure. This has led in some cases to informal dispute procedures, predating the first formal exchange of notices.
The disputes process has sometimes been called a 'ritual dance'. It requires taxpayers to respond to IR notices on time and with content that is stipulated in the TAA. In some cases,12 content will bind the taxpayer as to the issues and legal arguments that can be advanced in later litigation. The process requires care, attention to detail, efficient management and can involve considerable cost.
If an assessment emerges from the disputes process, the taxpayer concerned may challenge the assessment before the Taxation Review Authority (TRA)13 or the High Court of New Zealand. Rights of appeal lie from both, though there are important jurisdictional differences between the TRA and the court.
II COMMENCING DISPUTES
Contentious tax matters arise in three ways. First, IR may seek to test a taxpayer's position by undertaking a risk review. This is not an investigation and is not normally dealt with in the same way as a formal dispute. Formal tax disputes follow two distinct phases: pre assessment and post assessment. The pre-assessment phase is the statutory disputes process briefly referred to in Section I. The post-assessment phase is a tax challenge brought by a taxpayer in the TRA or the High Court. In certain limited circumstances, it is possible also to dispute IR actions by way of judicial review in the High Court.
i Risk reviews
IR employs a range of analytical tools to identify tax positions that present a risk of error. Rather than always commencing a pre-assessment dispute when a risk is identified, IR often contacts the taxpayer to invite it to review its position and correct anything that may be mistaken. The invitation to make a voluntary disclosure is an effective means of avoiding IR having unnecessarily to commit investigative resources to a matter that could be resolved more simply. The invitation is made more attractive by the fact that the risk review is avowedly not the start of an investigation. Because of that, penalties that might otherwise apply are reduced by between 75 per cent and 100 per cent for any tax discrepancy that is disclosed and corrected on a risk review. Until February 2019, a taxpayer who made a pre-notification voluntary disclosure could rely upon an assurance of non-prosecution for the relevant shortfalls. The Commissioner amended her position in a new standard practice statement, and will now prosecute if non-prosecution could lead to voluntary compliance more generally being undermined. Prosecution following a voluntary disclosure is intended to be exceptionally rare.14
ii The pre-assessment disputes process
If IR elects not to deal with a matter by way of risk review or its less formal approach to the taxpayer does not elicit a response, it is likely to start an investigation leading to the pre-assessment disputes process. There is no formal time frame within which IR must initiate the formal disputes process. This is affected in practical terms by the statutory time bar on IR issuing a reassessment of tax. However, when that time bar is not imminent, IR sometimes tries to agree an adjustment with the taxpayer. This process can be as lengthy and costly as the formal disputes process, which must still be undertaken if an agreed adjustment is not reached.
Broadly speaking, the formal process follows four stages:
- the exchange of initial notices between IR and taxpayers;
- a conference stage;
- the exchange of SOPs; and
- reference to the DRU and determination of the dispute.
The purpose of the disputes procedures is to improve the accuracy of IR decisions, reduce the likelihood of disputes by encouraging the full exchange of information, promote early identification of the basis for a dispute and promote prompt and efficient resolution.15 This is achieved by locking the taxpayer and IR into a series of exchanges that have to occur within a 'response period', normally of two months, but in some circumstances where the taxpayer is required to issue a first notice, four months.16
These are called a notice of proposed adjustment (NOPA) and a notice of response (NOR). A NOPA initiates a matter of dispute and may come from IR or from the taxpayer when IR is permitted to assess without issuing a NOPA. There are 16 instances in which IR is not required to issue a NOPA prior to assessing. In practice, those most likely to arise are where there is prima facie evidence of fraud by the taxpayer, issuing a NOPA would be likely to cause the taxpayer to flee New Zealand or otherwise make recovery of tax more difficult or the taxpayer has failed to file a return.17 Taxpayers will often also use the NOPA to dispute a return that has been filed on a conservative basis and the taxpayer wishes to advance a different tax position without the risk of penalty.18
The content of a NOPA is prescribed by statute19 and must:
- identify the tax adjustments that are proposed;
- provide a statement of facts and the law in sufficient detail to inform the opposing party of the grounds for the proposed adjustment;
- state how the law applies to the facts; and
- include copies of 'significantly relevant' documents.
Before the expiry of the applicable response period, the person to whom the NOPA is issued must provide a NOR or be deemed to have accepted the previously proposed adjustments and to have lost the right to challenge the resulting assessment.20 The content of a NOR is also prescribed and is designed to join issue with the matters raised in the NOPA, principally by setting out an explanation for why they are considered to be wrong. There have been some instances where poor content has led to IR arguing that a notice is invalid, but the threshold is relatively low as long as the main requirements for content are met.21
The conference stage
The exchange of initial notices sets the stage for discussion, argument and negotiation between IR and taxpayers. Although not part of the statutory disputes regime, the conference stage has proved to be a useful and generally welcome addition to the process because it allows the parties to explain and advocate their respective positions outside the limitations of a written document.
IR has placed significant importance on the conference stage as an opportunity to resolve disputes before they escalate too far. The conferences are conducted with trained IR facilitators in the chair so that the risk of unproductive outcomes is reduced. Facilitators are senior and experienced IR officers who have no connection with the case or the IR case officers. While they are not able to impose a resolution on case officers, facilitators will suggest that they reconsider IR's position on taxpayer arguments when that seems necessary and set a time within which further exchanges should take place. The conference stage may be adjourned more than once when the parties consider it prudent or productive to continue talking, rather than move to the next phase of the disputes procedure.
The next phase of the disputes process may also be truncated by agreement. In an 'opt-out' provision, IR and the taxpayer may agree that the dispute would be resolved more efficiently by being submitted to the court or TRA without the disputes process being completed.22 Opting out is not usual, but in major disputes where the positions of the parties are clear and it is very unlikely that either will be moved, it is a useful option that allows taxpayer and IR resources to be applied more quickly to litigating a dispute that is clearly not otherwise amenable to resolution.
Exchange of SOPs
If the disputes process continues, the parties exchange 'binding' SOPs. Their binding nature is achieved by the issue by IR of a 'disclosure notice',23 the effect of which is to limit the parties to the issues and propositions of law disclosed in the SOPs in any later challenge to an assessment.24
Once again, the content of a SOP is prescribed but a higher standard applies to it. While initial notices have to provide sufficient detail to 'advise' the recipient of the notice, a SOP must 'fairly advise' the recipient, at least in outline form, of the facts, issues, evidence and propositions of law that are relied on. The significance of a SOP is twofold. First, unless one of the several exceptions applies, IR may not amend an assessment of tax unless it has at least considered the taxpayer's SOP. Second, if the dispute is referred to the DRU, the SOPs that have been exchanged and the materials that accompany them form the basis of its autonomous review and determination of the dispute.
Whether a dispute is referred to review or not is often determined by time. The disputes process can be time-intensive, and unless IR has planned its process carefully, it can face pressure to complete a dispute to the minimum expected stage before the statutory time bar on reassessment falls.25 The time bar prevents IR from increasing an assessment if more than four years has elapsed since the end of the period in which the taxpayer filed the relevant return. Though the time bar may be waived,26 and there may be good reasons for granting a waiver, there is no obligation on a taxpayer to do this.
Determination by the DRU
Like the conference phase, the DRU (formerly known as the Adjudication Unit) has no statutory role in the disputes process. Its role is administrative, and not all disputes are referred to it. The DRU is part of the Office of the Chief Tax Counsel and part of IR's National Office. It is separate from IR's audit/investigation function and takes a fresh look at the dispute, providing a decision on the issues that is distanced from IR's investigators.
There are limits to the DRU's role. It will not make judgements of credibility because its consideration is 'on the papers' and so it defers to investigators' conclusions on credibility. It follows IR policy and so does not reconsider matters where the correctness of the policy is in issue. The DRU produces reports that are generally of high technical standard and, even if it finds against a taxpayer, its consideration of the issues often provides useful additional information that can be taken further into the post assessment challenge phase. DRU reports are usually produced in a timely way.27
As to that, it is an interesting quirk of the regime that a DRU decision that upholds IR's position may be challenged by the affected taxpayer but a DRU decision in favour of the taxpayer may not be challenged by IR. This has been described as a 'win, no lose' proposition for the taxpayer.28
iii Post-assessment challenges
Broadly speaking, a taxpayer must have completed the minimum requirements of the pre-assessment disputes process to have the right to mount a challenge to an assessment.29 That challenge must be commenced in one of the two available 'hearing authorities' within the response period that follows the issue of the relevant assessment notice. Subject to limited opportunities to enlarge time, this means that litigation has to be under way within two months of an assessment being issued,
The available hearing authorities are the TRA or the High Court. These are dealt with in more detail in Section III. The procedures of each are set out in comprehensive rules and involve all the usual elements of civil litigation, including discovery, the exchange of written witness statements, written legal submissions and the conduct of hearings on the basis that the taxpayer is plaintiff in the action and the IR defendant.
Tax litigation is usually conducted on behalf of IR by the office of the solicitor general, Crown Law (CL). CL has a hybrid role as both advocate for IR and protector of the public interest in revenue matters.30 This can lead to CL advancing arguments in litigation that are at odds with the position adopted by IR. This makes the binding nature of SOPs important, though, as seen, they are not always completed.
iv Judicial review
In some very limited circumstances, it is possible to dispute procedural actions by IR through judicial review in the High Court.31 The scope for judicial review has narrowed considerably in recent years. In all but a few instances, the courts prefer that arguments over procedural validity should be taken in the context of a challenge to a substantive assessment, rather than as a separate attack on IR.32 This stems from a suspicion that judicial review would otherwise allow taxpayers to game the system, especially considering the tight time frames within which IR must investigate, conduct and resolve a dispute, whether by concession or assessment. It also reflects a general approach that courts are slow to allow piecemeal challenges to a decision-making process, so that there is a high bar for the availability of judicial review in preliminary decisions.33
III THE COURTS AND TRIBUNALS
The two fora in which a tax challenge can be commenced are the TRA and the High Court. There are important differences between the two, though the practical implications of the differences for the conduct of tax litigation are limited.
i The TRA
The TRA is a specialist tribunal established by its own legislation34 to hear and determine tax challenges independently of IR. It has a non-exclusive first instance jurisdiction, and, although the TRA hears only tax matters and can be expected to have considerable tax expertise, the High Court is generally regarded as the court of first instance in which complex taxation matters should be commenced. The choice of forum is initially the disputant's, but it is not unusual for IR to apply to have complex matters moved into the High Court. Moreover, where it is likely that a first instance outcome will be appealed, the courts will usually not want to have three steps of appeal as would occur from the TRA, when two would be normal from the High Court, subject to leave to appeal being granted by the Supreme Court.
The TRA is obliged to hear cases in camera,35 and its decisions are published on the basis that all identifying details of the disputant taxpayer are removed. The press is excluded from all TRA proceedings. That can be a distinct advantage for taxpayers who guard their privacy, but there is no guarantee that such anonymity will survive a TRA decision if the matter is appealed to the High Court. There, the principal of open justice will often prevail unless the protection of commercial secrets warrants continuing anonymity.
The TRA has the status of a commission of inquiry36 and so has an independent authority37 to issue summonses for the attendance of witnesses and the production of documents. Nevertheless, it is bound by the limits imposed under a disclosure notice in the pre-assessment disputes phase,38 and although it has some latitude as to the formality with which it receives evidence,39 it must still operate on the basis that the burden of proof in a tax challenge rests with the taxpayer and under the statutory rules of evidence.40
The TRA has only a very limited jurisdiction to award costs, another characteristic that makes it a popular forum with taxpayers who may wish to test a position without the usual risk of an adverse costs award should the test not be favourably resolved. The costs jurisdiction is generally only to admonish bad behaviour, such as failing to appear or failing to give adequate notice of abandonment or settlement of a challenge. Costs do not 'follow the event' as in the courts.
A tax challenge in the TRA is commenced by notice of claim whose content is stipulated and, where there is no procedure stipulated under the TRA Act and regulations, normally proceeds under the rules applicable to civil hearings in the district court.
The TRA is presided over by a district court judge41 who travels to the main centres of New Zealand, and sometimes further afield, to hear tax challenges. A review of recent TRA decisions suggests that the time between the last day of hearing and decision is usually about three months. TRA decisions must be given in writing.42
One disadvantage of the TRA is that, because there is only one judge, decisions tend to reflect that judge's outlook. Practitioners report the TRA showing a default position that favours IR. That may reflect the burden of proof that taxpayers carry in tax matters, but it is unfavourably compared with the track record of past Authorities. Anecdotally, the number of cases coming to the TRA is reducing, which may reflect reducing taxpayer confidence in the tribunal.
ii The High Court
The High Court is New Zealand's court of general jurisdiction, and it shares first instance jurisdiction to hear tax challenges.43 Unlike the TRA, there is no presumption that tax matters can be heard in the High Court with any degree of privacy. The court is generally reluctant to set aside the principle of open justice, though if an application for confidentiality orders is based on good grounds, such as matters of commercial sensitivity, some protection is likely to be given, though not necessarily for the identity of the disputant.
A tax challenge is commenced in the court by way of statement of claim and proceeds as orthodox civil litigation under the High Court Rules. It is subject to civil discovery44 and the usual range of interlocutory applications and hearings.
High Court judges are not usually specialists in tax. With some exceptions, judges tend to be appointed to the High Court bench from broad generalist backgrounds, rather than from specialities. That reflects a view expressed by a number of senior judges that tax is simply a matter of statutory interpretation and that ordinary litigation processes will sort out the facts to which such interpretation applies. In reality, the generalist quality of the bench can mean that counsel in a tax challenge must often introduce the judge to, and explain, unfamiliar tax concepts.
High Court hearings are not free. Court hearing fees are payable and can be significant if a matter is to be heard over days or weeks. Costs follow the event, which is to say that the successful party is entitled to an award of costs. Such awards do not usually reimburse the successful party for its full costs. Costs are calculated on a scale according to the complexity of the proceedings, and each step in a case has a costs value ascribed to it depending on the complexity band to which it is allocated. Despite the use of a scale, it is not unusual for costs in tax cases to be considerable. This is one factor that encourages taxpayers to opt for the TRA over the High Court as a first instance forum. 'Indemnity costs', namely actual and full costs incurred by the opposing side, can be awarded but usually only because of especially poor behaviour in either bringing or conducting proceedings.
The same sort of review as was done for TRA decisions suggests that the time between hearing and a written tax decision being released by the High Court is usually between one and two months and is often shorter.
iii Conduct of proceedings generally
Whether they are advanced before the TRA or the High Court, tax challenges are subject to case management by the judges. Timetable orders are set, and adherence to them is expected. Evidence in chief is usually submitted to the TRA and court in the form of written briefs that must also be supplied to the opposing party. Document bundles must be settled between the parties, and at first instance the disputant taxpayer usually has the obligation to ensure that the material being relied upon in evidence is available to the Court and IR's counsel. The senior courts in New Zealand are moving towards electronic document management prior to and during a hearing, and this is gradually gaining traction in the High Court, but most first instance hearings are still predominantly paper-based.
Tax challenges often require expert evidence. Experts are required to act as servants of the court and not as partisans for the taxpayer or IR. New Zealand is a small country and marketplace, and if local expertise is required for a hearing it is often wise to plan for this well in advance to be sure that a 'quality' witness is not lost to the other side. There are strict limits on what evidence will be received as 'expert', and the courts have recently criticised both counsel and witnesses in tax cases where expert testimony was called on matters the court considered to be within its remit.
The TRA and court deal with a challenge by way of a fresh consideration of all evidence and argument. They are given the same powers as IR to be able to resolve the matter by confirming, cancelling or adjusting an assessment of tax.45 When the matter in issue is not an assessment, the hearing authority acts by directing IR to alter its decision to conform with its findings.
iv Rights of appeal
The TRA Act permits any party to appeal a TRA decision when the tax involved in the appeal is NZ$2,000 or more, where the amount of any loss involved in the appeal is NZ$4,000 or more or when the appeal is on a question of law only. In any other case the TRA's decision is final and conclusive.46 The appeal is to the High Court but the appellant is required first to file with the TRA a notice of appeal setting out its grounds and then to submit to the TRA a case on appeal, setting out the facts and issues to be determined. In a curious hold over from a 'case stated' procedure, the case on appeal therefore goes first to the TRA to be signed off and is then conveyed to the High Court.47
Appeals from the High Court are to the Court of Appeal. They are commenced by notice of appeal and require a case on appeal comprising the record of the first instance proceedings to be prepared and submitted for a rehearing of the matter. Rehearing means that although evidence is not taken afresh, the written record of evidence at first instance is considered afresh. Most substantive first instance tax decisions of the High Court carry a right of appeal to the Court of Appeal, but where the High Court has heard an appeal from the TRA, a further appeal is by leave only.
The court of final jurisdiction in New Zealand is the Supreme Court. Appeals to this court are by leave only and must evince a matter of general or public importance or general commercial significance. If the Supreme Court is satisfied that an appeal does not meet this threshold, it will treat the decision of the Court of Appeal as having resolved the matter and decline leave.
The Supreme Court has heard a number of significant tax cases since it was established in 2004. In its earlier years, the court was clearly marking out a different approach to tax avoidance disputes especially. This is dealt with more fully in Section VIII. More recently, the Supreme Court has considered somewhat fewer taxation matters.
IV PENALTIES AND REMEDIES
i Civil penalties
A reassessment of tax gives rise to additional imposts. These include late payment penalties (LPPs),48 use of money interest (UOMI)49 and shortfall penalties (SFPs).50 In most cases, a reassessment is made with a new due date51 so that LPPs are not applied retrospectively, but UOMI will normally be imposed from the original due date for assessed tax. Although UOMI is not a penalty, it is charged at a rate that is about twice commercial rates of interest and so is nevertheless regarded as punitive. This has led to recognised methods of mitigating UOMI costs, such as purchasing tax from pools maintained by tax intermediaries. UOMI is often a sticking point in resolving disputes. IR is seldom ready to compromise over it and will apply tax payments to interest first, so that an underlying core tax debt is not necessarily reduced.
IR must consider whether to impose an SFP in each instance of a tax shortfall.52 The SFP may be proposed at the same time as IR proposes substantive tax adjustments or it may be held in abeyance to await the outcome of the substantive dispute.53 The time bar that limits IR's power to reassess does not apply to SFPs.
SFPs are based on a sliding scale that reflects the relative culpability of the taxpayer in taking the disputed tax position. At the lower end of the scale, a penalty of 20 per cent of the shortfall applies for a failure to take reasonable care or taking an unreasonable tax position. This applies if the position fails to meet the test of being 'about as likely as not' to be correct. The next serious SFP is imposed at 40 per cent of the shortfall for gross carelessness. This requires recklessness as to the correctness or not of the tax position or some other egregious omission by the taxpayer, short of dishonesty. A penalty of 100 per cent of the shortfall applies to an 'abusive tax position', where the dominant purpose is to avoid tax. At the highest level, an SFP of 150 per cent of the shortfall applies in the case of evasion or similar act.54
These penalties are then subject to potentially substantial reductions for voluntary disclosure55 and for prior good taxpayer behaviour.56 Decisions over whether and at what level to apply SFPs can take some time because they are subject to consistency oversight within IR.
In addition to the ordinary range of SFPs, a special promoter penalty applies to those who offer, sell, issue or promote avoidance arrangements to 10 or more persons in a tax year.57
ii Criminal penalties
Tax crimes are prosecuted under the TAA and the Crimes Act 1961. Under the TAA, there are three broad categories of offences: (1) absolute liability offences; (2) knowledge offences; and (3) intent offences.
Absolute liability offences cover mundane non-compliance, such as failing to file returns, to keep required documents or to register when required to do so. The penalties imposed upon conviction for these offences are fines only, on a sliding scale up to NZ$12,000 per offence after a second conviction.58
Knowledge offences reflect a more serious range of non-compliance, where the offender knows of the relevant obligation and fails to meet it. Some of these offences are the same as absolute liability offences but with a knowledge overlay. They also include, however, more serious offending such as falsification or the provision of misleading information and the misapplication of tax deducted at source under New Zealand's employee Pay As You Earn (PAYE) scheme.
The extent of the required knowledge has been developed in case law. It is not necessary for IR to prove more than knowledge of a tax obligation and of the failure to meet it as required. The penalties imposed upon conviction for knowledge offences are a combination of fines and imprisonment. A second and subsequent conviction can attract a fine up to NZ$50,000 per offence and, in some instances, a term of imprisonment for up to five years can be imposed.59 Where a penalty of imprisonment is provided for, the court has available a range of sentencing options from community-based sentences and home detention through to imprisonment.60
Intent offences are essentially the knowledge offences overlaid with a more serious element in that the relevant default has not only occurred knowingly but also with intent to evade the assessment or payment of tax. These offences all carry a maximum sentence of a NZ$50,000 fine and up to five years' imprisonment.61
A number of more serious offences under the Crimes Act 1961 can arise out of tax offending. For instance, using tax filings to obtain refunds and credits to which one is not entitled can be prosecuted under more general heads of fraud and falsification of documents can be prosecuted as forgery. This is often done if the prosecution considers that the sometimes higher penalties available under the Crimes Act ought to be available to the court.
V TAX CLAIMS
i Recovering overpaid tax
Because New Zealand's tax system is based on self-assessment, the opportunities are limited for a taxpayer to correct an incorrect tax position that has led it to overpay tax. The starting point is that is that if a taxpayer considers that it has filed an incorrect return, it should use the NOPA procedure to advise IR of the need to change its tax position. If that is done within the relevant response period, the matter can be resolved without an issue arising over timing.
That is not always possible, and in some cases an overpayment only becomes apparent because of events that occur later. This commentary deals with three instances, namely where:
- there is a case law change that allows a tax concession not previously claimed;
- a correction is sought beyond the time that a NOPA could be filed; and
- a taxpayer has second thoughts over an available choice of tax position.
Case law change
Largely, unless a taxpayer has actively maintained a dispute or can otherwise bring itself within the NOPA time line, it will not be permitted to go back and pick up the benefit of case law that arises after their filing. In some instances, it is possible to suspend IR action on a dispute pending the determination of a test case, but this requires formal recognition of the test and is not always available.
Correction out of time for NOPA
A residual discretion is given to IR, outside the disputes process, to correct assessments at any time to ensure that they are correct.62 This is subject to the statutory time bar that limits when an assessment to tax can be increased, but there is no limit on the period within which a correction by reducing liability can be made. The IR has a wide discretion to amend an existing assessment that may not be correct and substitute another more appropriate assessment. In exercising the discretion, IR may take into account factors such as that the discretion is not intended to be used by taxpayers as a way of circumventing the statutory disputes process or 'gaming the system', the merits of the case and the resources available to IR.63
IR refused in the past to consider its discretion to ensure correctness if it considered that the applicant taxpayer was trying to backtrack on a choice of tax positions that has ended up badly for it. Because it is now clear that IR must consider a number of factors, the 'regretted choice' approach, which was used by the Commissioner to simply bowl out a taxpayer's request for relief, is no longer a satisfactory basis on its own for refusing relief. A more nuanced consideration of the competing positions and what led to the choice being made will be required. If a taxpayer has simply made a mistake or has genuinely overlooked a tax advantage that could legitimately have been preserved, it might be due some leniency. The taxpayer that is well resourced and should have known better, and moreover made the error repeatedly without it being spotted might not be dealt with as sympathetically.64
ii Challenging administrative decisions
The limited possibility that judicial review may be available for some administrative decisions has already been covered. For the most part, if a taxpayer considers that administrative defaults have arisen in IR, it must raise those in the disputes process and challenge them before a hearing authority, rather than try to pre-empt IR in its functions. There are extreme (and possibly theoretical) instances in which judicial review could be used independently of the disputes process to curtail capricious, arbitrary or unreasonable IR behaviour. Judicial review is also available to dispute IR actions such as the pursuit of information requests made under double tax treaties. However, the focus is on the use and application of the disputes process as the primary means of testing the validity of an assessment. Although the concept of a disputable decision is wider than just an assessment,65 the courts have concluded that a right of challenge is only conferred when an administrative decision translates into an assessed liability.66
This approach is reflected also in the prevailing view that published IR practice statements are not binding on IR and do not usually give rise to any general legitimate expectation as to how IR will behave.67
Because of these limits, there is a greater emphasis on escalating within IR complaints about administrative behaviour that is inconsistent with IR publications. Departmental embarrassment can only take you so far, however.
Standing to bring tax claims
A tax challenge may only be brought by the person whose tax position is under dispute.68 There may be other parties that are affected by that tax position, but they have no standing to bring a challenge themselves unless they have also taken a tax position and have disputed that to the point a right of challenge arises. This leads to a number of instances in which it is important for the interests of a person affected by the tax decisions of another to be protected by contract.
In the case of land transactions and goods and services tax (GST) (New Zealand's VAT equivalent), the tax status of a vendor may thwart a purchaser's expected input tax claim. Standard land conveyancing documents go some way to protecting the purchaser in such a case, but bespoke terms are often required. In this and other such cases, the terms can include comprehensive provisions under which one party agrees to conduct a tax challenge, having the standing to do so, when the economic outcome is for the benefit of another party who has no direct right of challenge.
Relief in recovery of tax debts
The guidelines for this article postulate the position where:
- company A in a group is assessed for tax;
- company B in the group has an available tax asset (say losses) that are transferred to company A to offset its liability; and
- subsequently the liability in company A is reversed, and company B is then assessed for tax that could have been sheltered had its losses not been allocated to company A.
In this case, if the group is a 'consolidated group' of companies,69 only a single tax return will be filed by a nominated member of the group. The allocation of losses and profits between group companies will be managed on a group-wide basis. If group A's liability is reversed, the net group position will revive unused losses that will be available when calculating the subsequent year's group income.
Outside a consolidated group, company tax positions have to be managed individually, though in parallel. If the formal disputes process is unavailable, an application would normally be made to reverse the transfer of losses and restore them to company B for offset against its income, using the IR discretion to reassess for correctness.
Costs usually only arise in litigation and have been addressed earlier in this chapter. Outside litigation, IR is entitled to charge for its time and attention in the consideration and delivery of binding rulings. The rulings process is covered next in relation to alternative dispute resolution.
Costs charged for binding rulings include an application fee and an hourly fee for preparing the rulings. The application fee is currently NZ$322 (including GST) and covers the cost of reviewing an application to establish whether it is valid and complete. After the first two hours (which are covered by the application fee) IR charges a fee of NZ$161 (including GST) per hour or part-hour for all applications except advance pricing agreements.
The cost of a private or product ruling can vary significantly, depending on the type of arrangement and the issues raised. As a guide, IR has published that the cost for applications for a private or product ruling completed between 2013 and 2015 ranged between NZ$4,000 and NZ$51,000. The average fee was approximately NZ$16,750, which reflects the fact that many binding ruling applications relate to substantial commercial transactions.70
VII ALTERNATIVE DISPUTE RESOLUTION
i Mediation and arbitration
Outside the facilitated conference stage of the pre-assessment disputes process, there is no recognised arbitration or mediation option to resolve tax disputes.
ii Binding rulings
A well-developed system of private, and public or product, binding rulings exists to permit taxpayers the opportunity to settle the tax outcomes of a proposed transaction or product ahead of time.71
Any person (including a company, trust and other unincorporated body) in its own right, or on behalf of a person who is yet to come into legal existence, can apply for a private or product ruling. If a ruling is applied for on behalf of a person who is yet to come into legal existence (like a company yet to be incorporated), the person must legally exist before the ruling can be issued.
An agent can apply on behalf of a person or persons, provided that the agent has the written consent of the applicant or applicants. For private rulings, the person must be, or intend to be, a party to the arrangement, and can apply either individually or jointly with other persons who are parties to the arrangement. For product rulings, the applicant must be, or intend to be, a party to the arrangement or be a promoter of the proposed arrangement.
The main advantage of a private or product ruling is that it is binding on IR. If the taxpayer applies the tax law as stated in the ruling, IR must follow the ruling, provided the taxpayer satisfies all stated conditions or assumptions. The applicant, however, is not required to follow the ruling.
A ruling will not be binding on IR if:
- there is a material difference between the facts identified in the ruling and the arrangement actually entered into;
- the applicant materially omits or misrepresents information in the application or when supplying further information;
- the ruling contains assumptions about future events or other matters that are incorrect, and are material to the ruling; or
- a condition stated in the ruling is not satisfied.
Although IR is bound to apply a ruling if a taxpayer follows it, IR can check whether the ruling has been complied with. It is not unusual for IR to investigate whether a taxpayer has satisfied any conditions or assumptions and whether the facts of the arrangement entered into match the arrangement described in the ruling. A ruling will not be binding if it has not been complied with. Private and product rulings are also only binding on the persons stated in the ruling in respect of the arrangement described in the ruling, and are not binding for any other person or arrangement, no matter how similar the facts may be. Rulings are not open-ended and will usually be for a stipulated period of years.
In transfer pricing, IR may issue a unilateral advance pricing agreement (APA) using the binding rulings process. Bilateral or multilateral APAs are administered under the relevant double tax agreements. Although unilateral APAs are one-sided, should double taxation arise on transactions covered by a unilateral APA, IR has published assurance that it will enter into competent authority negotiations with the other jurisdiction on the basis of the unilateral APA position. It considers unilateral APAs to be especially viable where the amounts at stake are small or where most of the transfer pricing risk lies in New Zealand, or both.
In the year to 20 June 2017, IR completed 17 APAs, well down on the 153 completed the year before.
Since 1 October 2019 the Commissioner has introduced short-process rulings intended to address the expensive and time-consuming nature of binding rulings, which discourages smaller taxpayers. Any individual or organisation with an annual gross income of NZ$20 million or less may seek a short-process ruling to answer a tax question dealing with an expected tax liability of less than NZ$1 million in the relevant year.72 A short-process ruling should take about six weeks and costs NZ$2,000, paid in advance.73 Short-process rulings are also binding on IR. As these are a very recent development, and short-process rulings are confidential, it remains to be seen if the new process is effective.
Tax avoidance is addressed by both a general anti-avoidance rule (GAAR) and specific anti-avoidance rules. This commentary deals only with the first.
New Zealand's GAAR74 addresses tax avoidance arrangements (i.e., arrangements having a more than incidental purpose or effect of tax avoidance) and empowers IR to reconstruct the arrangement to the extent required to counter any tax advantage produced by it. The approach of the Supreme Court has recently been summarised thus75 by reference to three major cases.76
- A staged test applies. At the first stage, the legal form of the transaction is tested against the ordinary meaning of any relevant specific provisions. At the second stage, the economic substance of the arrangement is considered, both in its constituent parts and as a whole. That arrangement is then tested against a wider view of the purpose of the specific provisions, viewed in the context of the Income Tax Act as a whole. The second stage consists of testing the economic substance of an arrangement against the economic substance Parliament contemplated by the specific statutory provisions.
- If the arrangement (or any constituent part of that arrangement) does not fit within the particular provisions (considered in the wider sense) at the second stage, then, viewed objectively, the purpose or effect of the arrangement will be tax avoidance. In this way, effect is given to both the general avoidance provision and the specific provisions, both viewed purposively.
- The majority of the court has noted a number of factors that would be relevant to the second stage, parliamentary contemplation, inquiry. These include the manner in which the arrangement is carried out, the duration of the arrangement and the financial consequences for the taxpayer, artificiality, circularity, non-market transactions and pricing, whether expenditure will in fact be incurred and the (lack of) effect on a taxpayer's financial position.
There is a third stage (referring to the words 'merely incidental') but the majority of the court considered it would rarely apply.
There is nothing wrong in a taxpayer seeking out a tax advantage as long as it is one that Parliament contemplates would be obtained in the circumstances. However, if an arrangement uses specific tax provisions within the legislation in a way that was not within Parliament's contemplation, it will be tax avoidance, even if a taxpayer technically complies with the specific provisions. The importance of making a realistic assessment of parliamentary intention was recently emphasised in one of the few tax avoidance victories of a taxpayer over IR. The High Court reminded IR that Parliament could be expected to have intended basic tax principles, such as individual liability, to apply, when IR argued for a broader economic analysis.77 The appeal from this decision is due to be heard early in 2020, though after publication of this edition.
The reality that tax outcomes should follow economic benefits and burdens has also been confirmed, as the factors listed above show. If a transaction produces a tax benefit that is totally disproportionate to the economic burden undertaken by the taxpayer it is likely to be avoidance.
New Zealand has enthusiastically supported the work of the Organisation for Economic Co-operation and Development (OECD) base erosion and profit shifting (BEPS) initiatives. On 27 June 2018, a bill78 received the royal assent that amends the relevant tax statutes to:
- tighten further the way related-party debt is priced, to limit interest deductibility;
- eliminate tax benefits arising from hybrid and branch mismatches;
- address methods used to avoid creating a permanent establishment in New Zealand; and
- realign related-party transactions so that profits are better allocated to actual economic activities undertaken in New Zealand.
The amendments came into force on or prior to 1 July 2018.
In the wake of the anti-BEPS measures coming into effect, IR has updated its compliance focus on multinationals. It issued a comprehensive practical guide to all the new measures and setting out its forward programme of work to ensure compliance by multinationals. IR says it closely monitors all foreign-owned corporates with a turnover of more than NZ$30 million. They must submit information each year that must include their financial statements and tax reconciliations. IR also says it has new intelligence from tax treaty partners by way of country-by-country reports, telling it how major multinationals have allocated their profits around the world.
IX DOUBLE TAXATION TREATIES
The approach adopted under New Zealand law to the interpretation and application of double taxation treaties (DTTs) has recently been the subject of two decisions. One dealt with the New Zealand DTT with South Korea and one with the DTT with China. Both decisions applied well-known principles of purposive interpretation of treaties but also addressed some of the realities about inconsistent treaty language.
In Chatfield,79 IR sought information in New Zealand on behalf of the South Korean Revenue. The New Zealand party from whom the information was sought applied for judicial review of the IR decision to make the request and then sought discovery of the South Korean DTT information request. The application for discovery was declined and the High Court80 made a number of observations about the interpretation and application of DTTs that were not disturbed on appeal:
- differences in language between treaties is likely because they are negotiated against the background of particular languages, legal systems, historical influences, tax law and wider policies and national expectations;
- it cannot be expected that the terms of the DTTs will be expressed with the same precision as ordinary domestic tax legislation;
- it should not be assumed that various provisions dealing with a matter that is common to all DTTs mean the same thing. The particular DTT in question should be examined but in light of its international context and the preceding points; and
- on the use of OECD commentary as an aid to interpretation, the court noted: 'Any changes to the Commentaries (where there has been no relevant substantive change to the Model Convention) are to be viewed not as recording an agreement about a new meaning but as reflecting a common view as to what the meaning is and always has been.'
Having made these observations, the court considered whether IR could be required to disclose to the applicant the basis on which South Korea had sought information under the DTT. In issue was the problem that the domestic law's exception from tax secrecy seemed to allow IR to release information related to tax challenges (i.e., cases dealing with liability) but not judicial review. The judge considered this in the light of the OECD model DTT and the commentaries to it.
The judge noted that the model DTT included six additional words that did not appear in the South Korean DTT with New Zealand. She construed the DTT as if those words were in it, so that the way was cleared for the court to consider whether the Commissioner should meet ordinary expectations of discovery in judicial review. This is an example of a wide interpretation being made of DTT language, by reference to commentary and to give effect to the broad principles of the DTT. The High Court subsequently struck down IR's request for information on behalf of South Korea, in part because IR did not satisfy the court that it had considered adequately the DTT terms for the exchange of information.81
The Chatfield case was appealed to the Court of Appeal and the case was heard in August 2018. The Court of Appeal upheld the High Court decision of Wylie J, confirming that requests for information issued to Chatfield & Co Limited by IR, to allow IR to respond to a DTA request for information from the Korean National Tax Service, were unlawful. The Supreme Court denied IR leave to appeal the Court of Appeal's decision in favour of Chatfield, effectively approving the decision at the highest level.
In Lin,82 the High Court considered whether a tax sparing credit should be available to a New Zealand resident shareholder of a Chinese company whose income was attributed to the shareholder under New Zealand's controlled foreign company regime. IR argued that the wording of the China DTT excluded the credit, even though it would have been available had the shareholder invested directly in China and not through a company. The court concluded that the language relating to tax credits had effectively been extended by the development of OECD commentary so that tax was creditable (and by extension so was tax spared) if it had been paid in China on income also brought to charge in New Zealand, though the actual taxpayer in each case was a different person.
This case was also appealed to the Court of Appeal, which overturned the High Court decision.83 Leave to appeal the approach taken by the Court of Appeal to the interpretation of the DTT was refused by the Supreme Court.84
X AREAS OF FOCUS
IR's current tax policy work programme85 sets out a number of areas of focus. This focuses on productivity, wellbeing and economic growth. The work programme seeks to explore the recommendations of the recent final report of the Tax Working Group (TWG) and implement them as appropriate. This includes:
- a review of the current land rules, particularly in relation to investment property and speculators, land banking and vacant land;
- reviewing how to minimise the tax system's impact on businesses and enhance economic performance;
- the tax system's role in driving infrastructure investment;
- using information gathering to minimise compliance and administration costs;
- continuing implementation of the business transformation programme, which focuses on modernising the tax system;
- a review of charitable sector taxation and other exemptions;
- a review of taxation of digital services; and
- general reform, remedial work, social policy packages and environmental taxes.
The investigative focus for IR is reflected in the matters on which it reports regularly to its minister. For the past several years, those reports have emphasised the hidden economy, complex issues including aggressive tax planning, fraud and tax compliance in the property sector.86 The 2019 report also emphasised the recent modernisation of the taxation system, including introducing online services for all taxes, automating tax refunds, and a new customer-facing website.87
XI OUTLOOK AND CONCLUSIONS
Under New Zealand's system of proportional representation, a coalition lead by the New Zealand Labour Party makes up the current government. The Labour Party campaigned on the need for tax reform. To that end, it appointed a tax working group (TWG) to examine and report on aspects of the tax system.
The TWG was to consider whether:
- the tax system operates fairly in relation to taxpayers, income, assets and wealth;
- the tax system promotes the right balance between supporting the productive economy and the speculative economy;
- there are changes to the tax system that would make it more fair, balanced and efficient; and
- there are other changes that would support the integrity of the income tax system, having regard to the interaction of rules for taxing companies, trusts and individuals.88
Certain matters were beyond the TWG's remit. These include increasing any income tax rate or the rate of GST and inheritance tax, and changes that would apply to the taxation of the family home or the land under it. In addition, the adequacy of the personal tax system and its interaction with the welfare transfer system was outside the TWG's scope. The TWG was also not able to consider the BEPS agenda, for which legislation had recently been was introduced .89
The TWG issued its final report on 21 February 2019.90 In summary, the TWG made the following high-level suggestions for New Zealand's tax system:
- the introduction of a broad tax on capital gains;
- increasing the role that taxation plays in sustaining and enhancing New Zealand's natural capital through environmental taxation;
- changing the loss continuity rules, expanding deductions for 'black hole' expenditure and concession for infrastructure projects;
- increasing tax concessions for the New Zealand Superannuation Fund; and
- introducing additional welfare transfers and adjusting income tax rates and brackets for low income individuals.
The TWG put forward four illustrative packages, showcasing potential 'revenue-neutral' packages of tax reform for the government's consideration, each package focused on redistribution of wealth to lower income individuals. Further, the TWG highlighted the following matters requiring significant attention from the government:
- the future of work and potential labour market changes;
- improving the integrity of the tax system by reducing opportunities for tax avoidance;
- increasing the IR's data transparency; and
- investment in the IR's tax policy and technical and investigatory staff.
While most of the matters raised by the TWG are still undergoing consideration, the Prime Minister, Jacinda Ardern, has ruled out introducing a capital gains tax under her leadership, citing a lack of public mandate. A number of the TWG recommendations are within the current areas of focus for IR, covered in Section X.
The New Zealand system for the resolution of tax disputes is administratively complex, formulaic and cumbersome. It is intended to improve taxpayer compliance and IR decision-making and, in combination, reduce disputes in number and longevity. The numbers speak for themselves: while a good many tax matters are disputed, comparatively few are litigated, and, of those that find their way into the courts, the great majority are resolved in IR's favour.
That is not to say that there is unfairness or bias in the system. On the contrary, tax disputes are pursued in this country in an environment remarkably free, by some international standards, of influence, unfairness or graft. Instead, the system is doing what was intended. It winnows out matters that ought not to be litigated much earlier than might otherwise be the case. That is achieved by a combination of incentives for better taxpayer decision-making and a greatly improved capability for technical analysis and judgment within IR. By and large, that leaves the few cases that are tested each year being the ones that raise issues worthy of judicial consideration.
1 Geoffrey Clews is a barrister and Head of Chambers at Old South British Chambers, Auckland, New Zealand. The author acknowledges the assistance of Sam Davies and Jordan Curtis, barrister associates at Old South British Chambers, in reviewing the original and current editions of this chapter.
2 While the precise number of investigations is not reported, they identified in 2017 discrepancies amounting to NZ$1.3 billion where taxpayers did not return correctly: The figure to June 2018 was NZ$1.06 billion. Of that, some NZ$282 million was ascribed to countering aggressive tax planning. In the year to June 2019, IR identified some $985 million of tax position difference, attributing $298 million of that to aggressive tax planning: IR Annual Reports 2017 and 2018 and 2019.
3 At 30 June 2017, IR had 104 active cases involving interpretations of tax law and 115 live tax prosecutions before the courts: IR Annual Report 2017. In the year to June 2018, the number of prosecutions was 121 and, of those, 94 dealing with tax evasion or fraud were completed. To June 2019, IR completed 68 prosecutions, with 92 still live: IR Annual Reports 2017 and 2018 and 2019.
4 IR won 80.8 per cent of disputes that proceeded to litigation in 2017. In 2018 this increased to 89.1 per cent, reflecting a total win by IR in 41 of 46 cases. In 2019 that dropped again to 78 per cent of cases: IR Annual Reports 2017 and 2018 and 2019.
5 Tax refers to Income Tax and Goods and Services Tax (New Zealand's equivalent of value added tax).
6 Normally calculated from the end of the reporting period in which the relevant return has been filed. Section 108 and 108A, TAA.
7 See, generally, Part IVA, TAA.
8 Penalty reductions are under Section 141G, TAA. The previous assurance of non-prosecution for evasion disclosed prior to the notification of an audit was withdrawn on Crown Law advice that a blanket assurance was unlawful. Now IR retains a discretion whether to prosecute or not in cases of 'serious evasion' that could have a negative impact on taxpayer compliance generally. The effect of this on taxpayer disclosure is not yet known.
9 See Part 3, TAA.
10 An administrative addition to the process that is not provided for in statute.
11 The disputes review stage is intended to assure taxpayers that investigative officers' decision making is considered with a fresh set of eyes.
12 At what is called the statement of position (SOP) phase.
13 A first level tribunal operating under its own legislation and presided over by a district court judge.
14 Inland Revenue Standard Practice Statement 19/02.
15 Section 89A, TAA.
16 Response periods may be enlarged but only in exceptional circumstances that have been closely confined by statute and the courts.
17 Sections 89C and 89D, TAA.
18 Section 89DA, TAA.
19 Section 89F, TAA.
20 Sections 89H and 89I, TAA.
21 Validity is not a matter that is determined only by IR but by the courts. Taxpayers may refile a notice to correct invalidity if they have demonstrated the intention to carry on a dispute: Section 89K, TAA.
22 Section 89N(1)(c)(viii), TAA.
23 Section 89M, TAA.
24 Section 138G, TAA.
25 Section 108 and 108A, TAA.
26 Section 108B, TAA.
27 All draft reports in 2018 and 2019 were produced within three months of referral according to IR's Annual Reports for 2018 and 2019.
28 CIR v. ANZ National Bank Limited (2007) 23 NZTC 21,167 (CA).
29 There are some assessments for which there is no right of challenge, such as those under various provisions that are left entirely to the discretion or judgment of IR: Section 138E, TAA.
30 Protocols between IR and CL set out the relationship as of July 2009.
31 For actions that are capricious or arbitrary, or unreasonable in the administrative law sense, or where a right of challenge is not conferred by the TAA.
32 Senior courts have warned counsel that recourse to judicial review over the available route of tax challenge may sound in a personal costs award.
33 For example, A Lawyer v. New Zealand Law Society  NZHC 1961
34 Taxation Review Authorities Act 1994 (TRA Act).
35 Section 16(4), TRA Act. See also Case 1/2019  NZTRA 1, per Sinclair DCJ.
36 By Section 15, TRA Act.
37 Commissions of Inquiry Act 1908.
38 Section 17(2A), TRA Act. The TRA may, however, allow new issues and propositions of law in very limited circumstances: Section 17(2B), TRA Act.
39 Section 17, TRA Act.
40 Section 17(3), TRA Act, referring to the Evidence Act 2006.
41 The TRA Act provides for one or more TRAs to be appointed. They need not be judges, but in recent times have been appointed from the District Court bench. The current TRA is Her Hon Judge Alison Sinclair.
42 Section 25, TRA Act.
43 It is one of two hearing authorities under Section 138G, TAA.
44 The court is trying to reduce the extent of required discovery with tailored discovery orders that often apply in tax cases where a good deal of material is exchanged before the challenge commences.
45 Section 138P, TAA.
46 Section 26, TRA Act.
47 Section 26(2), (3), (5) and (6), TRA Act.
48 Section 139B, TAA.
49 Imposed under Part 7, TAA.
50 Section 141 et seq., TAA.
51 Section 142A, TAA.
52 Section 141, TAA.
53 This can be affected by the possibility of criminal prosecution, which is ruled out if an SFP is imposed first.
54 See Sections 141A, 141B, 141C, 141D and 141E, TAA.
55 Section 141G, TAA.
56 Section 141FB, TAA.
57 Section 141EB, TAA.
58 Section 143, TAA.
59 Section 143A, TAA.
60 Under the Sentencing Act 2006.
61 Section 143B, TAA.
62 Section 113, TAA.
63 Westpac Securities NZ Limited v. CIR  NZHC 3377.
65 Section 3(1), TAA.
66 Vinelight Nominees Limited v. CIR (2005) 22 NZTC 19,298.
67 Westpac Banking Corporation v. CIR (2008) 23 NZTC 21,694.
68 Section 138B, TAA.
69 A wholly owned group.
71 The following commentary is drawn from IR's published web page on binding rulings, see note 70.
72 Sections 91EK and 91EL, Tax Administration Act 1994.
74 Sections BG1 and GA1, Income Tax Act 2007.
75 Justice Susan Glazebrook, Statutory Interpretation, Tax Avoidance and the Supreme Court: reconciling the specific and the general (2013); published on https://iknow.cch.co.nz. Her Honour is a current member of the Supreme Court bench.
76 Ben Nevis Forestry Investments Limited v. CIR  NZSC 115; Glenharrow Holdings v. CIR  2 NZLR 359; Penny v. CIR  NZSC 95.
77 Frucor Suntory New Zealand Limited v. CIR  NZHC 2860.
78 Taxation (Neutralising Base Erosion and Profit Shifting) Bill 2017.
79 Cases culminating in Chatfield & Co v. CIR  NZSC 48.
80 At first instance and not disturbed on appeal.
81 Chatfield & Co Ltd v. CIR  NZHC 3289.
82 Patty Tzu Chou Lin v. CIR  NZHC 969.
83 Patty Tsu Chou Lin v. CIR  NZCA 38.
84 Patty Tzu Chou Lin v. CIR  NZSC 54.
89 See note 72.