IRD Tax Information Bulletin: Volume Eight, No.3 (August 1996) … · 2019. 11. 12. · 3 IRD Tax Information Bulletin: Volume Eight, No.3 (August 1996) The new disputes resolution

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IRD Tax Information Bulletin: Volume Eight, No.3 (August 1996)

Introduction to the new disputes resolution processNew procedures for resolving tax disputes come intoeffect from 1 October 1996.

This Tax Information Bulletin sets out how the newprocedures will operate. In particular, it sets out theadministrative procedures that Inland Revenue willfollow when conducting audits and assessing taxpayers.

The appendix to this TIB gives worked examples of thenew procedures, and sets out general audit procedures.

These new procedures are established by changes to theTax Administration Act 1994, other Inland RevenueActs, and the Commissioner’s administrative practices.There are also new High Court Rules and TaxationReview Authority Regulations, and changes to theTaxation Review Authorities Act 1994.

The new procedures apply to disputes relating to taxes,levies, duties, penalties and other amounts payable tothe Commissioner under the tax laws. Specifically, theyapply to:

• disputed assessments issued under tax legislation

• disputed determinations issued under tax legislation,such as loss determinations and determinations ofemployer/employee relationships.

The new procedures do not apply to assessments issuedto liable parents under the Child Support Act 1991 or toACC premium assessments.

The legislative amendments were contained in theTaxpayer Compliance, Penalties, and Disputes Resolu-tion Bill 1995. Their purpose is to ensure that:

• Assessments are as correct as practicable, first time.

• Disputes over tax liability are dealt with fairly,efficiently and quickly.

Current audit procedures remain largely unchanged upto what is currently the final interview stage. The newprocedures will be used when proposed adjustments arestill in dispute. Similarly, the procedures are unchangedfor taxpayer or agent-initiated adjustments until such

time as the taxpayer wishes to dispute the Commission-er’s decision not to alter the assessment.

The new procedures aim to ensure a correct assessment by:

• promoting early identification of issues

• improving the accuracy of the Commissioner’sdecisions in respect of assessments

• reducing the number of disputes by ensuring fulldisclosure

• encouraging prompt and efficient resolution of dis-putes.

The new provisions implement recommendations madeby the Organisational Review Committee in its reportOrganisational Review of the Inland Revenue Depart-ment.

They place increased emphasis on information disclo-sure and discussions between the Commissioner and thetaxpayer or agent. The procedures are designed toensure that each party to the dispute is fully informed ofthe facts, evidence, issues, propositions of law andinterpretations upon which each party’s position isbased on.

The combined effect of section 17 information requestsand an evidence exclusion rule mean that an “all cardson the table” approach will help to resolve disputes asquickly as possible.

Built into the pre-assessment process for resolvingdisputes is provision for conferences between theCommissioner and the taxpayer or agent. Further, withinInland Revenue there is a new Adjudication Unitwhich provides an impartial and objective review ofunresolved disputes between the taxpayer and theCommissioner.

Page 44 of this TIB lists the Amendment Acts that wereenacted by the Taxpayer Compliance, Penalties, andDisputes Resolution Bill 1995. The Taxpayer Compli-ance and Penalties section of the Bill will be covered ina separate TIB.

The new disputes resolution process in contextThe package is designed to encourage voluntary compli-ance by taxpayers. This is achieved by:

• clarifying the behaviour required of taxpayers, and byimplication that which is unacceptable

• providing comprehensive penalties fornon-compliance, including an increase in penaltiesfor hindrance and a reduction in penalties for co-operation and assistance

• simplifying lines of authority within Inland Revenue

• providing access to efficient and effective means ofenforcement such as court orders and prosecution.

The new disputes resolution procedures are part of apackage of reforms which include:

• legislative enactment of taxpayer obligations

• enhancement of the Commissioner’s ability to enforcerequests for information under section 17

• more comprehensive compliance and penalties ruleswhich come into effect for the 1997-98 income yearfor standard balance date taxpayers (i.e., 1 April 1997)

• a customer segment-based organisational structurewithin Inland Revenue which identifies and targetstaxpayer needs and risks.

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ards of full and timely disclosure apply to both taxpay-ers and the Commissioner. The nature of the documentsrequired under the new process, combined with animpartial review by a team of technical experts beforean assessment is made, encourages both consistency andquality in technical decisions.

The new section 17A of the Tax Administration Act1994 provides that the Commissioner has access to CourtOrders to enforce compliance with requests for informa-tion. We expect that this will result in the expeditiousgathering of information. All information necessary foran audit should be made available at the earliest possiblestage. If information requested has not been produced,or if there have been unnecessary delays in producing it,the Commissioner will seek Court Orders and at thesame time will consider prosecution action for failure tofurnish information.

The combined effect of section 17A and the evidenceexclusion rule means that the “all cards on the table”approach to resolving disputes should be reached at theearliest possible stage. The new procedures are designedto encourage full and open discussion between theCommissioner and taxpayer or agents throughout theaudit process.

We will issue a separate TIB shortly to outline ingreater detail the new compliance and penalty provi-sions. In terms of the new disputes resolution process,taxpayers or agents can expect penalties to be consid-ered as part of the audit process.

from page 1The new disputes resolution procedures build ontaxpayers’ obligations to ensure that their taxationaffairs are in order. In addition to requiring full disclo-sure on a timely basis and penalising tardy or unco-operative behaviour, the Tax Administration Act nowcontains a new section 15B, which outlines taxpayers’primary tax obligations. These obligations are to:

(a) correctly determine the amount of tax payable by thetaxpayer under the tax laws

(b) deduct or withhold the correct amounts of tax frompayments or receipts of the taxpayer when requiredto do so by the tax laws

(c) pay tax on time

(d) keep all necessary information (including books andrecords) and maintain all necessary accounts orbalances required under the tax laws

(e) disclose to the Commissioner in a timely and usefulway all information (including books and records)that the tax laws require the taxpayer to disclose

(f) co-operate, to the extent required by the RevenueActs, with the Commissioner in a way that assists theexercise of the Commissioner’s powers under the taxlaws

(g) comply with all other obligations imposed on thetaxpayer by the tax laws.

In the new disputes resolution process the same stand-

ApplicationThe new disputes resolution procedures deal with thesesituations:

1. When the taxpayer disagrees with any of the follow-ing actions which the Commissioner intends toundertake:• issuing a taxpayer with an assessment or deter-

mination that differs from the amount or basisdeclared in the taxpayer’s tax or other return

• amending an existing assessment or determina-tion based on new information

• issuing a taxpayer with an assessment and thetaxpayer has not filed a tax or other return

• making a disputable decision.

2. When the Commissioner issues an assessment or adetermination instead of a NOPA, and the taxpayerhas not previously accepted the assessment ordetermination in writing, and the Commissionerdisagrees with the taxpayer’s proposed adjustment.

3. When the Commissioner issues an assessment or adetermination instead of a NOPA, and the taxpayerwishes to alter a previously-filed return, but theCommissioner disagrees with the taxpayer’s pro-posed adjustment.

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The new disputes resolution procedures introduce anumber of new concepts as well as changes to presentpractices.

This section introduces the key concepts that you needto know about. These concepts are fully described frompage 11 onwards. The following is a brief description ofthe key changes and concepts.

The Commissioner will generally issue a Notice ofProposed Adjustment (NOPA) in either of thesesituations:

1. If the Commissioner wishes to issue a taxpayer withan assessment or determination which differs fromthe amount or basis declared in the taxpayer’sreturn.

2. If the Commissioner wishes to amend an existingassessment based upon new information,

and in either case, the taxpayer does not agree with thatassessment or proposed assessment.

The NOPA will set out the details of the assessment oramended assessment which the Commissioner proposes.

A taxpayer or agent is able to issue a taxpayer NOPAto the Commissioner if the Commissioner has issued anassessment or determination without first issuing aNOPA to the taxpayer or agent. A taxpayer’s NOPAmust contain the same information as is required in theCommissioner’s NOPA.

A NOPA is a written document containing all of thefollowing:

• the items the Commissioner or taxpayer proposesshould be adjusted (an itemised description by natureand amount, with supporting calculations, for eachproposed adjustment. Penalties, including penal tax(if any) will be included in a Commissioner’s NOPA.)

• the tax laws upon which the proposed adjustments arebased (the section or sections of the Revenue Actsrelied upon for each separate adjustment)

• the facts giving rise to the proposed adjustments(including reference to source documents, contracts,memoranda and other evidence bearing on the facts.Full details are essential to enable consideration ofall the facts and issues.)

• the legal issues in respect of the proposed adjustments(the legal questions raised by each proposed adjust-ment, including tax laws relied upon)

• the propositions of law relied on or distinguished inrespect of the proposed adjustments (the reason fortaking a particular position stated in terms of estab-lished law. Leading case authorities may be citedhere.)

A NOPA may contain more than one issue, relate tomore than one period and relate to more than one taxtype.

If a taxpayer or the Commissioner disagrees with one ormore of the proposed adjustments in a NOPA, he or shemust notify the other party by means of a Notice ofResponse within two months from the date of issue ofthe NOPA.

A Notice of Response is a written document which:

• specifies which items are not agreed with or consid-ered erroneous

• specifies the tax laws relied upon• outlines facts contained in the NOPA which are in

error• outlines any additional facts• outlines any additional legal issues arising from the

NOPA• states the propositions of law relied on in relation to

the notice.

The definition of taxpayer has been amended. Ataxpayer is defined as a person who:

• is liable to perform, or comply with, a tax obligation; or• may take a tax position

whether as principal, or as an agent or employee orofficer of another person.

There is a provision relating to adjustments acceptedin writing. Once adjustments proposed by the Commis-sioner have been accepted in writing, no further chal-lenge can be made to those adjustments.

The legislation also defines response period. This isgenerally two months from the date of issue of theoriginating document (NOPA, assessment, disclosurenotice or disputable decision). The two month responseperiod is not varied in cases when the period embracesall or part of the Christmas holiday break.

Deemed acceptance occurs if there has been no re-sponse to an originating document within the responseperiod. Deemed acceptance results in the loss of rightsto challenge the adjustments further.

A taxpayer’s late response will be deemed to be receivedwithin the response period if exceptional circum-stances apply. Exceptional circumstances are circum-stances which:

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Summary - key changes and concepts

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Once the parties have completed their Statements ofPosition, the evidence exclusion rule applies.

Under the evidence exclusion rule, both the taxpayerand the Commissioner are limited in any challenge tothe facts, evidence, issues and propositions of lawdisclosed in their respective statements of position.

The evidence exclusion rule is subject to a judicialdiscretion to admit previously undisclosed matters. Theapplicant must show that he or she could not, with duediligence, have found or discovered this material at thetime of delivery of his or her Statement of Position, andadmission of those items is necessary to avoid manifestinjustice.

Disputes that aren’t resolved at the disclosure stage orearlier will generally be referred to Inland Revenue’sAdjudication Unit. The Adjudicator is delegated theCommissioner’s power to assess. The Adjudicatorexercises this power in a manner that is quite separatefrom other areas of Inland Revenue, in particular fromOperations, as a crucial part of ensuring impartiality.

The Adjudicator’s focus is to consider the correctapplication of the law and determine whether the factsof the case meet the requirements of the legislation.Adjudication also brings an impartial fresh perspectiveto the dispute. The Adjudicator will not revisit issueswhich have been resolved during the course of the auditprocess.

Adjudication is an administrative procedure; not alegislative requirement.

A disputable decision is an assessment or a decision ofthe Commissioner under a tax law that may be subjectto an objection or a challenge.

If the taxpayer is dissatisfied with a disputable decision,he or she may challenge it by filing Court proceedings.There are three different Court forums; the TaxationReview Authority’s Small Claims Jurisdiction, theTRA’s General Jurisdiction, and High Court. Theseare all explained below.

The Commissioner’s policy on the use of informationRequests under section 17 of the Tax AdministrationAct 1994 has been revised to suit the objectives of thenew disputes resolution process:

• The Commissioner will issue Section 17 requests asrequired when there is a dispute between the Commis-sioner and a taxpayer over a proposed adjustment.Such requests will be directed at specific issues, andwill seek confirmation in writing that the request hasbeen complied with.

• New section 17A permits the Commissioner to seek aCourt Order for the production of information. This

• are beyond the taxpayer’s control; and• provide reasonable justification for a late response.

An act or omission of a taxpayer’s agent is not anexceptional circumstance, unless the act or omissionwas caused by an event or circumstance beyond thecontrol of the agent and meets both of the followingconditions:

• It could not have been anticipated.• It could not have been avoided by compliance with

accepted standards of business organisation andprofessional conduct.

The Commissioner’s late response will be deemed tohave been received within the response period if excep-tional circumstances apply. Such circumstances mustmeet both of the following conditions:

• They must be beyond the control of the Commis-sioner.

• They must provide reasonable justification for a lateresponse.

Before issuing a late notice rejecting a taxpayer’sNOPA, the Commissioner must obtain from the HighCourt an order allowing the late issue. Reasonablejustification includes a change to a tax law, or a new taxlaw, or a Court decision on a tax law, that is enacted ormade within the response period.

The statute (time) bar provision has been amended to:

• expire four years from the end of the year/period inwhich a tax return is filed

• allow a taxpayer to waive the statute (time) bar for aperiod of up to six months.

A conference process is incorporated into the newprocedures to ensure that the parties have every chanceto resolve issues during the dispute. A conference mayoccur at any stage considered beneficial and there maybe several throughout the process. The conference is anadministrative procedure and is not a legislative re-quirement.

The disclosure notice procedure is started by theCommissioner. It requires both the Commissioner andthe taxpayer to “lay their cards on the table” by detail-ing, in writing, their respective Statements of Position.

Each party’s Statement of Position must contain all ofthe following for each adjustment still in dispute:

• the facts and evidence• the issues considered to arise• the propositions of law to be relied on.

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is an alternative to prosecution action for failure tofurnish information.

These are the key features of the TRA’s new SmallClaims Jurisdiction:

• The taxpayer can elect for the case to go to the SmallClaims Jurisdiction.

• There is a $50 filing fee, payable by the taxpayer.

• Its jurisdiction is limited to cases in which thedisputed tax amount is $15,000 or less.

• It can only hear simple cases in which the facts areclear and not in dispute.

• The taxpayer can represent himself/herself, or use anagent.

• Its decisions are non-precedential.

• There is no right of appeal.

• Decisions are not published.

There are no significant changes to cases heard in theTRA’s General Jurisdiction.

The only significant change to cases heard in the HighCourt is that the High Court rules have been amended.

To take a case to the TRA (either jurisdiction) or theHigh Court, the taxpayer must issue proceedings in therelevant authority within two months of whichever ofthe following applies:

• the date the amended assessment was issued, if theCommissioner issued the NOPA and the adjustmentimposes a fresh liability or increases an existingliability

• the date the amended assessment was issued, if thetaxpayer issued the NOPA and the Commissioner hasrejected some part of it

• the date the Commissioner issued a written notice thatthe adjustment will not be made, if the taxpayerissued the NOPA and the Commissioner’s rejectiondoes not result in an amended assessment.

This two month time limit can be extended by judicialdiscretion if there are exceptional circumstances.

For this purpose exceptional circumstances is definedas an event or circumstance beyond the taxpayer’scontrol, which gives the taxpayer a reasonable justifica-tion for not challenging an assessment or determinationwithin the prescribed two-month period. An act oromission of a taxpayer’s agent, employee or tax adviseris generally not an exceptional circumstance.

If the Commissioner intends to prosecute, this actionmust be completed before any penal tax or shortfallpenalty is imposed.

To impose penal tax or a shortfall penalty, the Commis-sioner must issue the taxpayer with an assessmentnotice showing the amount of the penalty.

The new procedures do not affect taxpayers’ rights tojudicial review.

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Summary charts - steps in disputes resolution process

Diagram 1: Pre-assessment phase - Commissioner issues a Notice of Proposed AdjustmentThis diagram shows the procedures usually followed when the Commissioner proposes an adjustment to a return.(There may be variations according to the circumstances.)

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1

2

1

2

1

1

21

YES

NO

NO

YES

1

2

1

2

1

1

1

1

1

1

1

1

In TP's favour

In CIR's favour

YES

NO

NO

YES

NO

YES

Occurence Conference Disclosure Adjudication FinalisationNotice

Commissionerissues NOPA

Taxpayer issues NoticeAssessment issuedof Response rejecting

NOPA?

Commissioneraccepts taxpayer’s End of process

contentions?

Conference In taxpayer’s favourEnd of process

takes place

Disputed issues In Commissioner’s favour Assessment issued;resolved? end of process

Commissioner issuesdisclosure notice andstatement of position

Taxpayer issuesstatement of position? Assessment issued

Commissioner amendshis statement of position

Is issue resolvedto address any newat this stage?

In TP’s favourEnd of process

matters in taxpayer’sstatement of position

In CIR’s favourAssessment issued

Assessment referredto Adjudication

Adjudicator determines End of processissues

Assessment issued;taxpayer may challenge

in court

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Diagram 2: Pre-Assessment phase - taxpayer issues a Notice of Proposed AdjustmentThis diagram shows the procedures usually followed when the taxpayer proposes an adjustment to a return. (Theremay be variations according to the circumstances.)

54

2 1

2

1

1

21

1

1

2 1

2

2

1

1

1

1

1

1

1

1

YES

Occurence Conference Disclosure Adjudication FinalisationNotice

Taxpayer wishes tocontest an assessment

or determination, soissues NOPA to IRD

within 2 month period

Commissioner Amended assessmentissues notice of issued, incorporating

Response rejecting taxpayer’s proposedNOPA? adjustment

Taxpayer rejectsCommissioner’s Existing assessment

Notice of stands; end of processResponse?

Conference In taxpayer’s favour Taxpayer’s NOPA affirmed

takes place or amended; amendedassessment issued

Disputed issuesIn Commissioner’s favour Existing assessment

resolved? stands; end of process

Commissioner issuesdisclosure notice?

Taxpayer issues Existing assessmentstatement of position? stands; end of process

Commissioner issues Taxpayer’s position

statement of position? accepted; amendedassessment issued

Is issue resolved In TP’s favour Taxpayer’s NOPA affirmed

at this stage?or amended; amended

assessment issued

In CIR’s favour Existing assessmentstands; end of process

Assessment referredto Adjudication

In TP’s favour

Adjudicator Amended assessmentdetermines issues issued

In CIR’s favour

Existing assessmentstands; taxpayer may

challenge in court

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Diagram 3: Post-Assessment Disputes Resolution proceduresThis diagram shows the procedures usually followed when the taxpayer wishes to pursue an assessment or determina-tion to a Court.

Taxpayer decides to challenge

assessment

Commissioner files Statement of

Defence

End of process

Was a disclosure notice issued?

Assessment confirmed or

amended

If heard in TRA small claims jurisdiction - end of process

If heard in TRA general jurisdiction or High Court -

unsuccessful party considers appeal

Evidence exclusion rule does not apply. Arguments in Court limited to grounds of

challenge

Evidence exclusion rule applies. Either party must apply under

judicial discretion if they want to introduce material not disclosed in

Statements of Position

Hearing held; decision made

NO

NO YES

YES

Assessment or determination issued

or confirmed

Taxpayer files Notice of Claim in

High Court

Taxpayer files Notice of Claim in

TRA (small claims or general jurisdiction)

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Summary chart - time limits in disputes resolution processThis chart sets out the time limits that taxpayers and the Commissioner must meet in the new disputes resolutionprocess, and the consequences of failing to meet any of them.

Consequences ifIssue/action Time limit time limit not met

Taxpayer who disagrees with an Two months from date assessment Assessment becomes final unlessassessment must issue a Notice of issued exceptional circumstances exist orProposed Adjustment section 113 Tax Administration

Act applies

Commissioner must respond to Two months from date taxpayer Taxpayer’s Notice of Proposedtaxpayer’s Notice of Proposed issued Notice of Proposed Adjustment deemed accepted unlessAdjustment Adjustment exceptional circumstances apply

Taxpayer must reject Two months from date Commissioner Commissioner’s Notice ofCommissioner’s Notice of issued Notice of Response Response deemed acceptedResponse

Taxpayer who disagrees with a Two months from date Commissioner Commissioner’s Notice of ProposedNotice of Proposed Adjustment issued Notice of Proposed Adjustment deemed accepted unlessissued by the Commissioner must Adjustment exceptional circumstances applyissue a notice of response

Taxpayer wishes to continue with Two months from date Commissioner Commissioner’s Notice of Proposed,a dispute after Commissioner issued Disclosure Notice Adjustment, Notice of Response, orissues a disclosure notice, so he or Statement of Position deemedshe must file a Statement of Position accepted

Commissioner must issue a state- Two months from date taxpayer Taxpayer’s Statement of Positionment of position in response to issued Statement of Position to deemed accepted, unless judicialtaxpayer’s statement of position Commissioner discretion applies

Commissioner wishes to respond Two months from date taxpayer Commissioner may not raise newto new issues raised in taxpayer’s issued Statement of Position. facts, evidence, issues orStatement of Position, so must propositions of law, unless judicialissue an addition to previous discretion granted.Statement of Position

Taxpayer wishes to lodge a Court Two months from date of notification A challenge cannot proceed,challenge of a disputable decision subject to judicial discretion

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Comparison table - old and new disputes proceduresThe following table shows the different phases of an audit under the old and new disputes procedures.

Events under old process Events under new process

Investigation Audit phase Audit phase

Assessments issued Agreed assessments can be issued,section 17 notices are likely

Recognition of disagreement Objection NOPA Phase

NOPA issued

Notice of Response

Formal Section 17 Notices

Crystallisation of issues Case Stated request Conference/Disclosure

Conferences held

Disclosure Notices

Statements of Position issued

Evidence Exclusion rule applies

Agreed assessments can be issued.

Decision to state case Adjudication

Assessments issued

Litigation Court Court

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Disputes resolution process for audit casesIntroductionMost disputes arise from audit activities and it is herethat the new procedures have the greatest impact. Adispute arises when the taxpayer and the Commissionerhave not reached agreement on a proposed adjustment atthe completion of the field work. The new disputesresolution process emphasises early resolution of thedispute by encouraging full disclosure by both theCommissioner and the taxpayer to ensure the assessmentis as correct as possible the first time.

The new procedures are designed to ensure that informa-tion and evidence gathering are completed during thepre-assessment phase. The procedures will not apply ifan audit has started and the taxpayer makes a voluntarydisclosure, which has been agreed to in writing. Result-ing penal tax or shortfall penalties which are not agreedto will be dealt with under the new procedures.

The new procedures rely on a series of informationdisclosures between the Commissioner and a taxpayer,designed to ensure that each is fully informed of thefacts, evidence, issues (including penalties if applicable),propositions of law and interpretations upon which theirrespective positions are based. Full knowledge of eachother’s position is expected to reduce the potential fordisputes and to materially assist in the early resolution ofdisputes which do arise.

The main impact of the new procedures on field activityis the expectation of early disclosure of information. Theprocedures will also affect the timing of the issue of anassessment. When the field work has been completed butno agreement has been reached on some or all of theissues identified the Commissioner will not automaticallyissue an assessment. The next step will depend on thestatus of the issues identified.

Commencing the dispute process

Identifying the issuesOnce the field work has been completed there are anumber of possible outcomes:

• All of the issues are agreed and no discrepancyresults. Inland Revenue will issue a letter finalisingthe audit once the case is independently approved,usually by the reporting officer.

• All of the issues are agreed and a discrepancyarises. The investigator and the taxpayer will recordthe adjustments in writing. The adjustments will thenbe independently approved, usually by the reportingofficer. Inland Revenue will issue an assessment(s)incorporating the adjustments.

• Some of the issues are agreed and others aredisputed. The investigator will issue a NOPA orseries of NOPAs covering disputed issues. Issueswhich have not been agreed to in writing will be

addressed fully within a NOPA. If several returnperiods are involved and there are no disputes forsome periods, Inland revenue will issue assessmentsfor those periods. (These assessments cannot later bechallenged). The remaining periods will generallyproceed to the NOPA stage. We will not issue partialassessments for periods in which some issues remainin dispute.

• The issues are identified but clarification is needed.To continue the audit, the investigator may issue asection 17 request for any outstanding information ormay issue a NOPA.

• None of the issues are agreed. The issues will beincluded in one or more NOPAs.

If a proposed adjustment results in tax to pay, thetaxpayer can make a voluntary tax payment at any timeto meet the proposed liability. This would reduce use ofmoney interest (UOMI) that may accrue during finalisa-tion of the audit.

Usually the Commissioner will issue a NOPA if thereare unresolved issues at the end of the field work phaseof an audit.

Generally, the auditor will advise the taxpayer that aNOPA is being issued. This can be by letter, phone callor fax. This pragmatic approach may not always bepossible, so failure to advise the taxpayer or agentbefore issuing a NOPA does not render the NOPAinvalid. We intend to adopt this approach for othernotices issued by the Commissioner, such as theDisclosure Notice. We also expect that taxpayers andtheir agents will adopt this pragmatic approach.

Status and purpose of the NOPASection 89F Tax Administration Act 1994

The purpose of the NOPA is to ensure that both theCommissioner and the taxpayer are talking about thesame issues and are aware of the arguments on whichthe other party is relying. This is achieved by setting outall of the following in writing:

• the items the Commissioner or taxpayer proposes toadjust

• the tax laws upon which the proposed adjustments arebased

• the facts giving rise to the proposed adjustments

• the legal issues in respect of the proposed adjustments

• the propositions of law relied upon or distinguished inrespect of the proposed adjustments.

Reducing these points to writing emphasises the need toreview the positions taken and fosters open and frankdiscussion early in the resolution process.

When written agreement has been reached on someissues but others are unresolved, a NOPA will be issued

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new adjustment is proposed or the basis for the firstadjustment has fundamentally changed a new NOPAmay be issued. For example, when a NOPA contains aproposed adjustment related to depreciation deductionsand discussion raises an issue related to calculation ofdepreciation recovered, a further NOPA will be issued.Another example could be when a case is referred backby Adjudication for rework as one or both of the partiesto the dispute are arguing on an incorrect basis. Forfurther discussion on this issue, see “What happens ifkey arguments are missed” on page 20 of this TIB.

When Commissioner may not issue aNOPAThere may be circumstances when the investigator hasdiscovered an item which needs to be adjusted, butcannot issue a NOPA. The Commissioner cannot issue aNOPA in any of these situations:

• if the proposed adjustment is already the subject of achallenge

• after the statute time bar has expired.

When Commissioner may issue anassessment without issuing a NOPASection 89C Tax Administration Act 1994

There may be circumstances in which an investigatorfinds a discrepancy and issues an assessment instead of aNOPA. Section 89C permits the Commissioner to issuean assessment without issuing a NOPA in limitedcircumstances. For audit cases this is likely to be in thefollowing circumstances:

• if the assessment corrects a tax position taken by thetaxpayer, in a way or manner agreed by the Commis-sioner and the taxpayer (sec 89C(c))

• if the assessment reflects an agreement reachedbetween the Commissioner and the taxpayer(sec 89C(d))

• if the Commissioner has reasonable grounds tobelieve a NOPA may cause the taxpayer to:

– leave New Zealand; and/or– take steps to make it more difficult for the

Commissioner to collect the payment of tax fromthe taxpayer or an associated person (sec 89C(e))

• if the assessment corrects a tax position previouslytaken by a taxpayer which is, or is the result of, avexatious or frivolous act or failure to act by thetaxpayer (sec 89C(f))

• if the taxpayer has not provided a tax return asrequired by law (sec 89C(h))

• if the taxpayer has failed to make or account for adeduction required to be made (sec 89C(i))

• if the assessment is consequential to an error made byanother taxpayer and an assessment has been, or isable to be, issued to that other taxpayer (sec 89C(k)).

to incorporate all the issues still in contention. Agree-ment in writing may be on a standard form availablefrom Inland Revenue or may be by a customised letter.Whatever its form, the agreement must set out the taxtype and period, the adjustment, the name of the taxpayerand the name of the Inland Revenue officer who agreedwith it.

The NOPA is the first formal step in the process ofresolving issues. At this stage either party may amend itsposition as the dispute resolution process advances. TheNOPA is not a binding document. However, resolvingthe dispute is more likely when both parties have fullydisclosed their positions. This should prevent anymisunderstanding and possible duplication of effort inpreparing subsequent documentation if the disputeproceeds beyond the NOPA stage.

There is an example of a simple NOPA in the appendixto this TIB. You can get a pre-printed NOPA form fromany Inland Revenue office.

In large or complex audits the Commissioner may issue anumber of NOPAs as issues arise.

If the taxpayer wishes to deal with proposed adjustmentsas they arise the investigator may issue a series ofNOPAs throughout the audit. When an audit involvesseveral years and the time bar is pending for one or moreof the years in question, the investigator may issueseparate NOPAs for each individual period. This willensure that the assessment can still be issued within thestatute time bar period.

When several NOPAs are issued, each one must beresponded to within two months of when it was issued.A single Notice of Response can be issued to respond tomultiple NOPAs issued on different dates, but it must beissued within the two month response period of theearliest NOPA. At the disclosure notice stage, all NOPAswill be incorporated into the one Statement of Position.

When a further NOPA will be issuedA new NOPA will only be required for issues thatweren’t covered in a previous NOPA. This is becausethe NOPA is not binding. For example, if a motorvehicle expense is initially categorised as privateexpenditure but subsequent discussion or furtherevidence indicates that it is actually capital expenditure,no new NOPA is required because the deductibility ofmotor vehicle expenses is the issue, which is clarifiedafter the initial NOPA. If the issue is not resolved, theissues raised in the NOPA will be clarified through theconference phase and formalised in the Statement ofPosition.

Additional NOPAs may be issued if issues arise whichrelate to amounts not previously contained in a NOPAand which are not agreed to by the parties. If the changeis a refinement of an earlier adjustment (such as themotor vehicle expenses mentioned in the previousparagraph), no new NOPA will be needed. However, if a

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The following examples show situations when theCommissioner would issue assessments in accordancewith the above provisions without issuing a NOPA:

Section 89C(i):

• If a taxpayer has failed to account for NRWT orPAYE.

Section 89C(k):

• In the case of group loss offsetting - if a company hasclaimed losses to which it is not entitled and thatcompany has been assessed (or is able to be assessed)to disallow those losses, the Commissioner may issuean assessment to the profit company which has offsetthe losses against its profits.

• In the case of GST if the parties have incorrectlyassumed a transaction was exempt from GST - if theCommissioner agrees that one taxpayer is entitled tothe input tax credit, the Commissioner may issue anassessment to the supplier requiring the supplier toaccount for output tax on the value of the supply.

• In the case of a partnership, if one partner has beenreassessed following the dispute process, and theadjustments affect all partners, consequential adjust-ments to all partners will be made.

There are other examples and circumstances when anassessment can be issued without first issuing a NOPA.These are noted under “Taxpayer Initiated Resolution ofDisputes” on page 17 of this TIB.

Section 89D Tax Administration Act 1994

When the Commissioner issues an assessment withoutfirst issuing a NOPA, the taxpayer can still dispute theassessment. To dispute the assessment, the taxpayermust issue a NOPA to the Commissioner. A taxpayer-issued NOPA is in the same form as one issued by theCommissioner. The process to be followed for a tax-payer-issued NOPA is discussed under “TaxpayerInitiated Resolution of Disputes” on page 17.

If a taxpayer has failed to file a return and the Commis-sioner issues an assessment, known as a default assess-ment, the taxpayer will not have to issue a NOPA, butmust file the return for which the default assessmentwas issued.

What to do once a NOPA is receivedWhen a taxpayer or agent receives a NOPA, the tax-payer can accept the proposed adjustments in writing,reject the adjustments by issuing the Commissioner witha Notice of Response, or do nothing.

Acceptance of NOPASection 89I Tax Administration Act 1994

The taxpayer can accept a NOPA by agreeing in writingor by doing nothing. If the taxpayer does not respond tothe NOPA within the two month response period, thetaxpayer is deemed to have accepted the adjustmentsproposed in the NOPA.

If a taxpayer intends to accept a NOPA, we recommenddoing so in writing. This will ensure an assessment isissued sooner, with any resultant interest and/or addi-tional tax reduced to a minimum.

If the taxpayer accepts any proposed adjustment or failsto respond to the notice within the two month responseperiod, the investigator or other officer has responsibil-ity for issuing an assessment including the adjustment.

If the taxpayer has accepted the adjustments or isdeemed to have accepted them, he or she may not theassessment.

Rejection of Commissioner’s NOPA -Notice of ResponseSection 89G Tax Administration Act 1994

If a taxpayer does not accept the proposedadjustment(s), the taxpayer or agent must issue a Noticeof Response to the Commissioner, within two months ofthe date of issue of the Commissioner’s NOPA.

The Notice of Response must state all of the followingwith sufficient detail to fairly inform the recipient:

• which items are not agreed with and how those itemsshould be changed

• the tax laws relied upon• the facts contained in the NOPA which are in error• any additional facts relied upon• any additional legal issues the taxpayer believes arise

from the NOPA including, for the sake of complete-ness, any tax laws relied upon

• the propositions of law relied on.

A taxpayer will not be able to merely state that theproposed adjustments are not accepted or are incorrect.If the notice does not contain the requisite informationit will be invalid.

If possible the Commissioner will contact the taxpayerand advise that the notice cannot be accepted and that afurther notice should be issued within the responseperiod. If the response period has expired the onlyavenue open to the taxpayer is to make an applicationfor exceptional circumstances.

The taxpayer is not bound by the contents of the Noticeof Response. However, to be a valid Notice of Responseit must contain the requisite information. If it is incom-plete and the response period expires, the taxpayer willbe deemed to have accepted the adjustments proposed bythe Commissioner.

Pre-printed Notice of Response forms are available fromInland Revenue.

Small claims election at Notice ofResponse stageTaxpayers may indicate in their Notice of Response thatthey would like any unresolved issues to be heard beforethe small claims jurisdiction of the Taxation ReviewAuthority.


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or omission was caused by an event or circumstancebeyond the control of the agent that meets both of theseconditions:

• It could not have been anticipated.

• It could not have been avoided by compliance withaccepted standards of business organisation andprofessional conduct.

Examples of exceptional circumstances are covered inthe Questions and Answers section on page 26 of thisTIB.

Considering taxpayer’s Notice ofResponseOnce the Commissioner has received the taxpayer’sNotice of Response, it will be considered by the investi-gator or other Inland Revenue officer dealing with thematter. That officer will consider the merits of thetaxpayer’s notice and accept or reject, in full, or in part,the taxpayer’s argument.

• If fully accepted, the Commissioner will make anyappropriate adjustments.

• If partly accepted, the Commissioner will advise thetaxpayer of those issues which he has accepted. Theremainder of the issues will progress to the conferencephase.

• If fully rejected, the Commissioner will advise thetaxpayer or agent that the Notice of Response hasbeen rejected in full. The issues will progress to theconference phase.

Conferences

PurposeThe purpose of a conference is to:

• identify and clarify the facts or issues in dispute

• facilitate resolution of any disputed facts

• facilitate resolution of any disputed issues;

• state the facts and define the issues in a clear andconcise manner for consideration by the AdjudicationUnit if they cannot be resolved.

The conference phase is an administrative practice ofthe Commissioner. It is not mandatory to have aconference. It is the Commissioner’s responsibility toensure that the disputes process moves to the conferencestage as required.

Conduct of a conferenceConferences will be kept as flexible as possible, consist-ent with the taxpayer’s wishes and other factors such asthe scope of the audit. Conferences may range from aphone call to several meetings, both before and after thedisclosure stage.

For complex cases, discussions or conferences are likelyto be more formal. If necessary the conference may

Because of the nature of small claims cases (i.e. theyhave no precedential effect and the facts are clear andnot in dispute), the pre-assessment exchange andanalysis of evidence and issues will often not require thesame degree of time. We anticipate that in some casesthe pre-assessment process for small claims cases maybe fast tracked compared to the usual dispute process.For example, this may involve the Commissioner notissuing a disclosure notice and proceeding straight toadjudication following the NOPA stage. In addition, thedocumentary evidence will be likely to be produced veryearly in the process. The time taken to respond tovarious notices, both by the taxpayer and the Commis-sioner, should be reduced.

Exceptional circumstances -taxpayer’s late responseSection 89K Tax Administration Act 1994

If the taxpayer responds to a NOPA outside the twomonth response period, the Commissioner can treat thelate Notice of Response as having been received withinthe response period when exceptional circumstancesapply.

Any request for consideration of a late Notice of Re-sponse should be in writing and include:

• a full explanation as to why the Notice of Response islate, together with any supporting evidence

• the Notice of Response which the Commissionerwould have received had it been issued on time. TheNotice of Response must accompany the request forlate acceptance because there is no provision to allowadditional time to issue the Notice of Response.

The legislation provides a balance between certainty asto time limits and fairness when exceptional circum-stances have prevented the taxpayer from responding toa NOPA within the response period.

A taxpayer must make a request for late acceptance assoon as reasonably practicable after becoming awarethat the response period has elapsed. If the Commis-sioner accepts the taxpayer’s request for a late Notice ofResponse, the Notice is deemed to have been receivedwithin the response period. If the Commissioner doesnot accept the late Notice of Response, an assessmentincorporating the adjustments proposed will be issued.If a Notice of Response is not received with the letter ofrequest, the Commissioner is not able to accept therequest and an assessment confirming the NOPA will beissued in due course (if not already issued).

The legislation defines exceptional circumstances verynarrowly. We anticipate that late Notices of Responsewill be accepted only on rare occasions. This reflects theonus on taxpayers to meet their tax obligations.

Exceptional circumstances are defined as an event orcircumstance outside the control of the taxpayer thatprovides reasonable justification for not respondingwithin the response period. An act or omission of anagent is not an exceptional circumstance unless the act

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adhere to a set agenda with one or more face to facemeetings. The meetings may involve not only thetaxpayer and the Inland Revenue officers dealing withthe matter, but also lawyers and other appropriateInland Revenue officers, accountants and lawyersrepresenting the taxpayer, and, if necessary, otherexperts advising either party. The experts will be peoplesuch as valuers, academics, engineers, bankers, etc. whocan provide specialist advice.

Legal and other advisers attending aconferenceIf a dispute is not settled during the audit or NOPAstage, both the Commissioner and the taxpayer maywant to obtain further expert legal or technical advice.The Commissioner accepts that, in these circumstancesit is appropriate for a certain amount of “back tracking”to take place. Some items that have already beendiscussed between the parties may need to be revisitedby the newly-introduced advisers. This approach isconsistent with the overall objective of the new proce-dures, which is to ensure a correct assessment. If thiswere not the case, it would put pressure on the parties inmany disputes to involve expert advisers at an earlierstage than is actually required.

It is not possible to revisit items that have previouslybeen agreed in writing or have not been rejected withinthe applicable response period.

Conference not held or abridgedThe Commissioner considers the conference phase to bea vital part of the disputes resolution process. Only inrare circumstances will the Commissioner not hold aconference, or decide to end or abridge a conference thatis already in progress.

The Commissioner will not prolong the conferencephase, even if agreement has not been reached.

The conference may be abridged or dispensed with ifany of the following apply:• The Commissioner is satisfied that the taxpayer or the

taxpayer’s agent is acting in a frivolous or vexatiousmanner, such as when the taxpayer or agent is settingunreasonable demands as to the time and place orterms of such meeting or refusing to conduct them-selves reasonably at any meeting.

• revenue losses may result from delaying tactics on thepart of the taxpayer.

• the taxpayer or agent and the Commissioner agree todisagree.

Any decision to dispense with or abridge the conferenceprocess will be made by an appropriate officer. Thedecision will be communicated in writing to the tax-payer or agent within five working days of when it ismade. A decision to dispense with or abridge theconference process may be changed at the discretion ofthe reporting officer.

If issues remain unresolved after a conference, theCommissioner will invoke the disclosure procedures.

After the disclosure phase, a further conference may beheld if it is likely to help resolve the dispute.

Disclosure proceduresSection 89M Tax Administration Act 1994

PurposeThe disclosure procedure will generally occur towardsthe end of the discussion/conference process if agree-ment has not been reached. During this part of thedisputes resolution process the Commissioner will issuethe taxpayer with a Disclosure Notice.

A Disclosure Notice can be issued at the same time as orany time after the taxpayer or Commissioner has issueda NOPA. If a Disclosure Notice is issued with a NOPAor before a response to a NOPA is due, a response mustbe issued in relation to both the NOPA and the Disclo-sure Notice. It would be rare to issue a DisclosureNotice at the same time or within the response periodfor a NOPA.

The purpose of the disclosure process is to require bothparties to state their respective positions on issues stillin dispute, in a Statement of Position. The effect of theStatement of Position is to bind each party to the facts,evidence, issues and propositions of law which theydisclose. Full disclosure in writing is essential; theStatement of Position forms the basis on which theissues will be argued if the case proceeds to court.

The Commissioner will dispense with the disclosureprocess in some instances, such as when the personalsafety or security of an informant is in issue. Authoritynot to issue a Disclosure Notice will be at a senior levelwithin the Service Centre or National Office.

Disclosure NoticeThe Disclosure Notice is issued by the Commissionerand requires the taxpayer to provide a Statement ofPosition, covering all issues in dispute.

An example of a Disclosure Notice is shown in thesample forms at the back of this TIB, and in the appen-dix.

Statement of PositionThe Statement of Position is a prescribed form, andmust contain all of the following details:

• the facts and evidence being relied upon• the issues considered to arise• the propositions of law to be relied upon.

If the taxpayer’s Statement of Position does not containthe requisite information, and the response period hasexpired, the taxpayer will be deemed to have acceptedthe Commissioner’s NOPA or Statement of Position. Ifthere is still time available in the response period, thetaxpayer will be able to issue a valid taxpayer Statementof Position. If possible, the Commissioner will contactthe taxpayer and advise that the Statement of Position isdeficient or invalid, as the case may be.


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Although the taxpayer has no right of reply the Com-missioner may agree to the taxpayer including furtherinformation in the taxpayer’s Statement of Position.This should be rare, particularly we expect that materialwhich is in the taxpayer’s domain can and should havebeen disclosed earlier in the disputes resolution process.

If taxpayer fails to respond to aDisclosure NoticeIf the taxpayer fails to respond to the Disclosure Noticewithin the response period, the taxpayer is deemed tohave accepted the Commissioner’s NOPA, or Statementof Position. An assessment will be issued accordingly.

Issues remaining unresolvedIf the taxpayer responds to a Disclosure Notice withinthe response period, and the issues remain in dispute,the unresolved issues will usually be referred to theAdjudication Unit. Conferences can still be held beforethe issues are referred to Adjudication, if this supportsthe possible resolution of a dispute.

Penal tax, shortfall penalties andprosecutionOne of the objectives of the new disputes resolutionprocess is the prompt and efficient resolution of dis-putes. To be consistent with this objective, the Commis-sioner will raise the issue of penal tax or shortfallpenalties as soon as is practicable, which in most caseswill be at the time the substantive issues are beingdiscussed. A discussion of the new shortfall penaltieswill be covered in a separate TIB.

A NOPA will be issued before any assessment oramendment of penal tax or shortfall penalties unlessthere is full agreement with taxpayer before issue of theNOPA or a court has directed the adjustment. Insummary penal tax and shortfall penalties will followthe disputes resolution process in the same way as thesubstantive issues, with the underlying shortfall deter-mining the amount of penal tax or shortfall penalty.

Penal tax or shortfall penalty will be assessed oramended in the following circumstances:

• if sufficient admissible evidence is held to supportimposition of the penalty, and

• the taxpayer agrees with the penalty or is deemed toaccept the penalty, and/or

• a court has directed an adjustment to an existingpenalty, or

• the Adjudication Unit supports imposition of thepenalty (in any case when the penalty remainsdisputed.)

If the Commissioner intends to prosecute this actionmust be completed before the imposition of any penaltax or shortfall penalty. Imposition does not occur untilan amount is notified by an assessment notice. Accord-

An example of a Statement of Position is shown in theappendix.

When the disclosure procedures are followed both thetaxpayer and the Commissioner will be limited in anycourt challenge to the facts, evidence, issues andpropositions of law disclosed in the Statements ofPosition. However, the Notice of Assessment and thebasis for this notice (e.g. the Adjudicator’s report) meetthe requirements for admission to Court. There will beno need to seek approval for admission of these docu-ments into Court, as this is the Commissioner’s disput-able decision.

Taxpayer’s Statement of PositionThe taxpayer’s Statement of Position must be filedwithin two months of the date of issue of the disclosurenotice. However, the taxpayer can apply to the HighCourt for additional time within which to issue aStatement of Position, if:

• The taxpayer applies before the expiry of the responseperiod, and

• The taxpayer considers the two month response periodunreasonable as the disputed issues have not previ-ously been discussed between the Commissioner andthe taxpayer or agent.

When the High Court considers a taxpayer’s applicationit will have regard to the conduct of the parties to thedispute and the purpose of the new disputes procedures.

Pre-printed Statement of Position forms are availablefrom Inland Revenue offices

Commissioner’s Statement of PositionWhen the Commissioner issues the NOPA, the Com-missioner’s Statement of Position will be issued at thesame time as the disclosure notice. The disclosure noticewill require the taxpayer to provide a Statement ofPosition within two months of the date of issue of thedisclosure notice.

The Commissioner has a right of reply to the taxpayer’sStatement of Position. If the Commissioner exercises hisright of reply he must do so within two months of thedate of issue of the taxpayer’s Statement of Position.

The Commissioner may apply to the High Court formore time to reply to a taxpayer’s Statement of Positionif:

• The Commissioner applies before expiry of theresponse period, and

• The Commissioner considers it unreasonable to replywithin the response period owing to the number,complexity or novelty of the matters raised in thetaxpayer’s Statement of Position.

The need to apply to the High Court may arise when thetaxpayer’s Statement of Position refers to facts, issues,evidence or propositions of law which have not previ-ously been disclosed.

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ingly, if penal tax or a shortfall penalty is to be imposedin addition to prosecution action, it may proceedthrough the new disputes procedures up to, but notbeyond, finalisation of the Commissioner’s decision. Ifboth prosecution and penal tax or a shortfall penalty areintended, imposition will be held up pending comple-tion of prosecution action.

Partnerships and income taxThe procedure for auditing partnerships is similar toother types of tax returns. In most cases the Commis-sioner will be dealing with the partnership’s agent ormanager. A NOPA will be issued to the partnershipagent or manager for the partnership, and all thepartners will be joined in this NOPA. This requiresagreement between the Commissioner and the partners.

If this agreement is not forthcoming, a NOPA will beissued to the partner representing the partnership, or toanother partner in the partnership. The dispute willfollow the usual procedure to resolution or adjudication,whichever is the earlier.

Once an issue is resolved for one partner, the remainingpartners will be assessed in terms of section 89C(k) -consequential adjustments. Individual partners whohave not been kept informed by the partnership’s agentor manager can still contest the assessment by issuing aNOPA to the Commissioner. It is likely that a shortenedprocedure will apply in these circumstances, as thematerial for sustaining the adjustment will have beenobtained during the review of the partnership itself.

When a partnership or an individual partner hasinitiated an adjustment by way of NOPA, and theCommissioner agrees to the adjustment, all of thepartners will be reassessed.

Taxpayer-initiated resolution of disputesSections 89D, 89F, 89H, 89L, Tax Administration Act 1994

IntroductionThe Legislation requires a taxpayer to issue a NOPAwhen requesting an adjustment to an assessment ordetermination. There may be circumstances when aNOPA is not required, such as when the requestedadjustment is one that the Commissioner agrees shouldbe made. Therefore, when a taxpayer wants an amend-ment made to an assessment, Inland Revenue recom-mends that initial contact be made by way of telephone,letter, counter enquiry or an IR 960A (agent’s form). Ifwe agree with the proposed amendment the taxpayerwon’t have to issue a NOPA. Such agreement would bemade in terms of section 113 of the TAA, which is asection enabling the Commissioner to amend returns toensure their correctness. However, it is essential that thetaxpayer contacts Inland Revenue immediately uponreceiving an assessment or determination, and does notleave it until later in the two month period. This willallow enough time to issue a NOPA if no agreement isreached between the Commissioner and the taxpayer (oragent).

This procedure will provide the taxpayer or agent withan early opportunity to explain why they think theassessment is wrong and how it should be amended. Ifthe Commissioner agrees with the request, the amend-ment will be made and an assessment issued. If theCommissioner does not agree with the amendmentrequested or it is likely that the issue will take sometime to resolve, the Commissioner will, if possible,advise the taxpayer or agent accordingly. The taxpayer

or agent will then have to formally initiate the disputesresolution process by issuing the Commissioner with aNOPA.

Inland Revenue guidelines require us to respond within21 days to correspondence (e.g., telephone queries,letters, IR 960A). If we cannot give a substantive replywithin 21 days, we will give an interim response. Wewill make every effort to resolve a taxpayer-proposedamendment to an assessment, but we will not extend theresponse period to issue a NOPA . Therefore, if there isany doubt on a taxpayer or agent’s part as to whetherthe Commissioner will agree to an adjustment, theyshould issue a NOPA, especially if there is not muchtime remaining in the response period. For example, ifthere is less that 4 weeks remaining before the expiry ofthe response period, the taxpayer or agent should issue aNOPA.

Failure to issue a NOPA, even though a taxpayer oragent may have queried an adjustment with InlandRevenue , will not constitute exceptional circumstances.The ability to issue a NOPA is still within the taxpay-er’s or agent’s control.

[Note: form IR 960A is a new form, designed with thenew disputes resolution procedures in mind. It is mainlyfor dealing with account maintenance amendments/queries and simple adjustments (such as missingdonations receipt or IR 12 certificate, or dividendincome not returned). The former IR 960 form can stillbe used for a limited time, to dispute assessments underthe former objection process, but not the new disputesresolution process]


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Section 89C(h)• If a taxpayer has not filed the required income tax

return, PAYE return, GST return or any other neces-sary return, the Commissioner will issue a defaultassessment.

In each of the above examples the current proceduresfairly, efficiently and effectively identify and address theissues.

If disputes arise from assessments issued in thesecircumstances, the new procedures for resolution ofthese disputes apply. However, the taxpayer, not theCommissioner, would have to issue a NOPA.

Commencing the dispute process

Taxpayer-issued NOPAsSections 89D, 89F Tax Administration Act 1994

When a taxpayer wants an amendment made to anassessment and the Commissioner does not agree withthe amendment, the taxpayer must issue the Commis-sioner with a NOPA. Taxpayers may also elect in theNOPA that they would like any unresolved issues to beheard in the small claims jurisdiction of the TaxationReview Authority. The NOPA must be issued withintwo months of the date of issue of the assessment.

If a taxpayer receives a default assessment, he or shecan only dispute the assessment by filing a return forthat assessment period. The taxpayer cannot dispute thedefault assessment by issuing a NOPA.

The NOPA requirements are cumulative; failure toinclude all elements will result in an invalid NOPA. If ataxpayer files an invalid NOPA and there is timeavailable within the response period, the Commissionerwill try to contact the taxpayer and advise that theNOPA is invalid. This will give the taxpayer an oppor-tunity to make the NOPA comply with the legal require-ments within the response period.

If the taxpayer does not issue a NOPASection 89I Tax Administration Act 1994

If the taxpayer does not issue a NOPA within theresponse period the taxpayer is deemed to have acceptedthe assessment and may not challenge it in court.

However, a taxpayer who considers that he or she isentitled to an adjustment, notwithstanding that the twomonth response period has expired, may contact InlandRevenue and request that the adjustments are made.This request will not take the form of a NOPA. If theCommissioner agrees that the taxpayer is clearlyentitled to the adjustment requested, the Commissionermay make the adjustment under section 113 of the TaxAdministration Act 1994. The Commissioner’s policyon the application of section 113 has not changed.

Section 113 permits the Commissioner to adjust a returnin order to ensure it is correct. If the Commissioner doesnot consider that the taxpayer is clearly entitled to theadjustment, the taxpayer must request that the Commis-sioner accept a late NOPA under the exceptionalcircumstances rule as explained below.

Assessments Without NOPAsSection 89C Tax Administration Act 1994

Section 89C allows the Commissioner to issue anassessment without first issuing a NOPA in any of thesesituations:• if the assessment corresponds with a tax return that

has been provided by the taxpayer (sec 89C(a))• if the Commissioner considers the assessment corrects

a simple or obvious mistake or oversight contained inthe tax return (sec 89C(b))

• if the assessment reflects an agreement between theCommissioner and the taxpayer correcting a taxposition previously taken by the taxpayer (sec 89C(c))

• if the assessment otherwise reflects an agreementreached between the Commissioner and the taxpayer(sec 89C(d))

• If the Commissioner has reasonable grounds tobelieve the notice may cause the taxpayer to -

– leave New Zealand; or– take steps to make it more difficult for the

Commissioner to collect payment of tax(sec 89C(e))

• if the assessment corrects a tax position taken by ataxpayer which is, or is the result of, a vexatious orfrivolous act or failure to act by the taxpayer(sec 89C(f))

• if the assessment is issued as a result of a direction ordetermination of a Court or the Taxation ReviewAuthority (sec 89C(g))

• if the taxpayer has not provided a tax return asrequired by law (sec 89C(h))

• if the taxpayer has failed to make or account for adeduction required to be made (sec 89C(i))

• if the taxpayer is entitled to issue, and has issued, aNOPA to the Commissioner in respect of a return(sec 89C(j))

• if the assessment is consequential to an error made byanother taxpayer and an assessment has been, or isable to be, issued to that other taxpayer (sec 89C(k).

The following examples illustrate when the Commis-sioner will continue to issue assessments withoutNOPAs:

Section 89C(b)

• if the calculations in a taxpayer’s tax return areincorrect, the Commissioner will correct the calcula-tion and issue an assessment based on the correctedamount.

Section 89C(c)

• if a taxpayer sends in another tax deduction certificateand asks for the relevant return to be amended, theCommissioner will issue an assessment including thenew deduction certificate.

Section 89C(d)

• If a taxpayer comes to the Inland Revenue office witha valid rebate receipt for a donation, the Commis-sioner will issue an assessment including the rebate.

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An example of the application of section 113 is con-tained in appendices.

If the taxpayer issues a late NOPASection 89K Tax Administration Act 1994When the taxpayer issues a NOPA outside the twomonth response period, the legislation deems the lateNOPA to have been received within the response periodif exceptional circumstances existed.

Any request for consideration of a late NOPA must bein writing and include:• a full explanation as to why the NOPA is late, to-

gether with any supporting evidence, and• the NOPA which the Commissioner would have

received had it been filed on time. The NOPA mustaccompany the request for late acceptance becausethere is no provision to allow additional time to issuethe NOPA.

The taxpayer must make a request for late acceptance assoon as reasonably practicable after becoming awarethat the response period had ended. If the Commissioneraccepts the taxpayer’s request for a late NOPA, theNOPA is deemed to have been received within theresponse period. If the Commissioner does not acceptthe late NOPA, the taxpayer will be notified in writingand an assessment incorporating the adjustmentsproposed will be issued (if not already issued). If aNOPA is not received with the request for considerationof a late NOPA, the Commissioner cannot accept therequest, and the assessment will be final.

Exceptional circumstances are defined as an event orcircumstance outside the control of the taxpayer thatprovides reasonable justification for not respondingwithin the response period. An act or omission of anagent is not an exceptional circumstance unless the actor omission was caused by an event or circumstancebeyond the control of the agent that:• could not have been anticipated, and• could not have been avoided by compliance with

accepted standards of business organisation andprofessional conduct.

Examples of exceptional circumstances are covered inthe Questions and Answers section on page 26.

Commissioner’s response totaxpayer’s NOPASection 89G Tax Administration Act 1994

Once the Commissioner has received the taxpayer’sNOPA it will be referred to the officer dealing with thefile for a response.

If the officer agrees with the adjustment proposed in thetaxpayer’s NOPA, he or she will advise the taxpayer inwriting and issue an assessment. If the officer does notagree with the proposed adjustment, the Commissionerwill issue a Notice of Response outlining why theCommissioner rejects the proposed adjustment.

If the Commissioner does not respondSections 89J, 89L Tax Administration Act 1994

If the Commissioner does not respond to the taxpayer’sNOPA within the two month response period, theCommissioner is deemed to have accepted the proposedadjustment and must issue an assessment to include thetaxpayer’s proposed adjustment.

However, the Commissioner is permitted to apply to theHigh Court for an order allowing the Commissioner toissue a late Notice of Response rejecting a proposedadjustment, if:

• The Commissioner considers that exceptional circum-stances apply, and

• The application is made before the Commissioneractually issues an assessment including the proposedadjustment.

If the taxpayer rejects theCommissioner’s Notice of ResponseSection 89H Tax Administration Act 1994

Once the taxpayer receives the Commissioner’s Noticeof Response, he or she may agree with the Commission-er’s response and accept that no adjustment should bemade, or reject the Commissioner’s Notice of Response.

To reject the Commissioner’s Notice of Response, thetaxpayer must advise the Commissioner in writingwithin two months of the date of issue of the Commis-sioner’s Notice of Response. There is no specific formatfor the rejection notice - a simple letter will suffice. Atthis point the issue will generally proceed to the confer-ence stage.

Failure to reject the Commissioner’s Notice of responseresults in a deemed acceptance by the taxpayer of aNotice of Response as if it were a NOPA.

Conference stageA conference is held to further clarify the positions ofboth the Commissioner and the taxpayer. It may be asformal or informal as the circumstances require.

Disclosure procedureIf the dispute has not been resolved during the confer-ence phase, the Commissioner may issue a DisclosureNotice to the taxpayer. This part of the process is thesame as that for disputes originating from an audit. Thesignificant difference is that when the taxpayer or agenthas issued the NOPA, the taxpayer will be required toprovide his or her Statement of Position first. TheCommissioner will then respond to the taxpayer’sStatement of Position with the Commissioner’s State-ment of Position, within the two month response period.

If the issues remain unresolved once the Statements ofPosition have been completed, the unresolved issues willusually be referred to the Adjudication Unit.

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Function of the Adjudication UnitIf agreement has not been reached on all issues at theend of the conference/disclosure stage, the case willgenerally be sent to the Adjudication Unit for considera-tion, regardless of the issue or amount of tax involved.

The Adjudicator is an impartial officer within InlandRevenue, independent of the audit functions. TheAdjudicator is required to take a fresh look at theapplication of the law to the facts of the case.

What goes to the Adjudication UnitOn completion of the pre-Adjudication disputes resolu-tion process, the following documents will be sent to theAdjudication Unit:

• Notice of Proposed Adjustment• Notice of Response• rejection of the Commissioner’s Notice of Response

(if applicable)• notes of conferences• the taxpayer’s Statement of Position;• the Commissioner’s Statement of Position• any relevant documentary evidence.

A cover sheet will be attached giving details of thetaxpayer’s (or taxpayer’s agent) and investigator’snames and addresses and the documents attached. Acopy of the cover sheet will be sent to the taxpayer oragent together with a letter asking if they would like anyother material already disclosed to be sent to theAdjudication Unit. Taxpayers can request copies of anydocuments they do not already have, such as notes ofconferences. Taxpayers will be given 10 working daysto respond, after which the file will be sent to theAdjudication Unit.

At the back of this TIB there is a sample cover sheet.

Limited fact findingIt is possible that the Adjudicator may need to contact aparty involved in the dispute, in order to clarify a point.However, this should be extremely rare.

If the Adjudicator contacts either party the contact willbe recorded in writing. The reason for the contact willbe noted, and the other party will be notified as follows:

• If contact is to be made with the investigator or otherofficer, an internal memo will be written to theinvestigator outlining the reason for the contact. Thetaxpayer or agent will receive a copy of the memo.

• If contact is to be made with the taxpayer or agent, aletter will be written to the taxpayer or agent outliningthe reason for the contact. The investigator or otherofficer will receive a copy of the letter.

If there is a written response from either party, theAdjudicator will forward a copy to the other party.

If the Adjudicator requests a meeting, the other party tothe dispute will have an opportunity to attend thatmeeting.

TimeframesThe Adjudication Unit will attempt to determine theoutcome of a case within four to six weeks, subject toworkloads and complexity of cases. Complex cases maytake longer than four to six weeks to complete. Thetimeframe within which decisions are anticipated to bemade in will be periodically reviewed.

What happens if a key argument is missedOn rare occasions the Adjudicator may believe that theassessment will be materially incorrect if he or sheaccepts either line of argument, because some importantlegal issue has been missed by both parties, or has notbeen pursued. In these circumstances, the Adjudicatorwill refer the case back to the investigator or otherofficer for rework. In this situation another conferencemay need to be held or a new NOPA may need to beissued. The Adjudication Unit will prepare a “referenceback” letter to the taxpayer or agent advising that thefile has been referred back to the investigator or otherofficer. This letter will state the reasons why the file hasbeen referred back.

For cases referred back for rework, the procedure torefer the case back to Adjudication will start at thedisclosure notice phase, as the earlier Statement ofPosition may no longer be valid for the issues referredback. In some instances the taxpayer and the Commis-sioner may agree to amend their Statements of Position,having regard to the reasons for the case being referredback to the investigator.

These procedures are intended to meet the objective ofissuing correct assessments first time.

Adjudicator’s decisionIn all cases a copy of the Adjudicator’s decision will besent to the taxpayer or his/her agent, and the investiga-tor or other officer involved with the case.

If the Adjudicator agrees with thetaxpayer’s positionIf the Adjudicator determines all of the issues in favourof the taxpayer, then:

• if the Commissioner issued the NOPA, the query willbe at an end. (Note: If any issues were agreed tobefore the case was referred to Adjudication and anassessment is required, the Adjudication Unit willissue the assessment).

Adjudication

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• if the taxpayer issued the NOPA, any assessmentaction will be undertaken by the Adjudication Unit,taking into account any issues agreed upon before thecase was referred to adjudication.

If the Adjudicator agrees with theCommissioner’s positionIf the Adjudicator agrees with the adjustments proposedby the Commissioner, the Adjudication Unit will issuean assessment on that basis.

If the Adjudicator agrees with the Commissioner’sposition not to accept a taxpayer’s proposed adjustment,he or she will issue a disputable decision. Any challenge

to that assessment or disputable decision (section 138B),must be filed in the appropriate hearing authority withintwo months of the date of issue of the assessment ordisputable decision.

If the Adjudicator agrees in part with thetaxpayer’s positionIf the Adjudicator agrees in part with the taxpayer andin part with the Commissioner, the Adjudication Unitwill issue any assessment required to be made.

When the Adjudicator determines an issue/adjustmentin favour of the taxpayer, the investigator has no abilityto challenge that decision.

Challenges - Taxation Review Authority or High CourtIntroductionA taxpayer who disagrees with the Adjudicator’sdecision, or an assessment issued following the disputesprocess, may challenge that decision by filing proceed-ings in the Taxation Review Authority (in either itssmall claims or general jurisdiction) or in the HighCourt, provided that both of these conditions are met:

• The assessment includes an adjustment proposed bythe Commissioner which the taxpayer has rejected, orwhich was the subject of an adjustment proposed bythe taxpayer which the Commissioner has rejected.

• The proceedings are filed with the Taxation ReviewAuthority or the High Court within two months of thedate of the assessment or determination. If thetaxpayer issued a NOPA and the Commissionerdecided not to amend the assessment, proceedingsmust be issued within two months of the date that thetaxpayer is notified of that decision.

Proceedings before theTaxation Review Authority

Limitation periodSections 138B, 138C, 138D Tax Administration Act 1994

Taxpayers must issue proceedings within two months ofwhichever of these dates applies:

• the issue date of an amended assessment, if theCommissioner issued the NOPA and the adjustmentimposes a fresh liability or increases an existingliability.

• the issue date of an amended assessment, if thetaxpayer has issued the NOPA and the Commissionerhas rejected some part of it.

• the date the Commissioner issued a written notice thatthe adjustment will not be made, if the taxpayerissued the NOPA and the Commissioner’s rejectiondoes not result in an amended assessment.

If a hearing authority considers that exceptional circum-stances have prevented a taxpayer or their agent from

issuing proceedings within the two month period, thetaxpayer or agent will be allowed to start a challenge.

Evidence exclusion ruleSection 138G Tax Administration Act 1994

When the Commissioner issues a disclosure notice to ataxpayer, the Commissioner and the taxpayer cannotintroduce any further facts, evidence, issues or proposi-tions of law in any subsequent challenge, unless bothparties agree otherwise.

If agreement is not reached, either party may apply to ahearing authority to have the further facts, evidence,issues or propositions introduced. If the new material isto be introduced, the hearing authority must be satisfiedthat both of the following apply:

• The party concerned could not, with due diligence,have discovered the facts or evidence, or issues ordiscerned those propositions of law, at the time ofdelivery of the Statement of Position.

• Having regard to section 89A (the purpose behind thedispute procedures), and to the conduct of the parties,the hearing authority considers the admission of thosefacts or evidence or issues or propositions of law isnecessary to avoid manifest injustice to the Commis-sioner or taxpayer.

The evidence exclusion rule imposes a very highthreshold for the introduction of new evidence, andreinforces the need to disclose all relevant matters at theearly stages of the disputes resolution process.

Paying half of the tax in disputeSections 7A, 128A & 138IA Tax Administration Act 1994

The legislation requires a disputant to pay the non-deferrable tax (50% of the tax in dispute).

If the taxpayer cannot pay the non-deferrable tax, he ofshe may provide acceptable security to the Commis-sioner instead. This security could take the form of amortgage or other encumbrance over any asset or right,and a guarantee or indemnity given to the Commis-sioner to meet any tax obligation.


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Taxation Review Authoritysmall claims jurisdictionSections 89E, 138B & 138C Tax Administration Act 1994

Amendments to Taxation ReviewAuthorities Act 1994An optional and simple “fast track” non-precedentialprocedure for dealing with small claims has beenintroduced as part of the jurisdiction of the TaxationReview Authority. The procedure is intended to dealwith simple cases with small amounts of tax in dispute.

Key elements of the Taxation ReviewAuthority small claims jurisdictionThe key elements of this jurisdiction are as follows:

• There is a $50 filing fee payable by the taxpayer.

• It can hear cases in which the tax in dispute is up to$15,000.

• It can only hear simple cases, in which the facts areclear and not in dispute.

• Its decisions do not set precedents.

• There is no right of appeal.

• The taxpayer can appear in person or use an agent.

• It is a fast track system for hearing disputes.

• Its decisions are not published.

The Commissioner may apply to have small claimscases transferred to the TRA’s general jurisdiction ifany of the following apply:

• The facts are not clear.

• The case may have precedential implications for othertaxpayers.

• There are recurrent amounts of less than $15,000involving the same taxpayer.

The small claims procedure is as informal as possiblewithin the bounds of natural justice.

How to elect the small claims procedureA taxpayer can elect in either the NOPA or Notice ofResponse that the case is to proceed as a small claim ifnot resolved. If the taxpayer so elects Inland Revenuemay follow an abridged pre-assessment procedure (e.g.an expedited conference phase). The taxpayer is boundby the election and cannot later choose to file the case inthe Taxation Review Authority’s general jurisdiction orin the High Court.

If the taxpayer has not made a small claims election inthe NOPA or Notice of Response, the taxpayer may stillchoose to file the case in the Taxation Review Authori-ty’s small claims jurisdiction. That action is bindingupon the taxpayer.

If a taxpayer has already paid all of the tax in dispute,the taxpayer can ask the Commissioner to refund onehalf of it.

The authorisation for the Commissioner to take securi-ties is contained in section 7A of the Tax Administra-tion Act. That section enables the Commissioner toaccept securities on whatever terms and conditions maybe required by the Commissioner, to call for replace-ment securities if the existing securities become inad-equate or insufficient, and to enforce a security if thetaxpayer defaults in the performance of his or her taxobligation.

If a taxpayer is not able to pay the non-deferrable tax orprovide security for it but nevertheless has a dispute thatshould be resolved through the courts, section 128A ofthe Tax Administration Act allows the Commissioner towaive the requirement for payment or security if, in theCommissioner’s view, both of the following apply:

• paying the tax assessed before the dispute is resolvedwill unduly prejudice the taxpayer’s business orpersonal circumstances.

• there is no material risk to the revenue in waivingpayment or the provision of security.

In order for the Commissioner to be satisfied that theconditions outlined above have been met, an affidavit ofassets and liabilities together with any relevant informa-tion will be required.

A waiver of the requirement to pay the non-deferrabletax, or to provide security for it, is only provisional. Ifthe taxpayer’s circumstances change, the requirement topay or provide security may be reinstated. In addition,the waiver extends only for the period during whichthere is a dispute.

The discretion to waive the requirement for payment orto accept securities will be exercised by an appropriateofficer of Inland Revenue in conjunction with theLitigation Management Unit.

Litigation ManagementInland Revenue’s Litigation Management Unit will beresponsible for managing the litigation of all tax casesand ensuring their timely outcome.

Once a case has been filed, but before counsel is ap-pointed, all contact with Inland Revenue by the taxpayeror the taxpayer’s agent must be made through theLitigation Management Unit, unless the unit hasspecifically authorised contact with some other InlandRevenue officer.

Following appointment of counsel, all contact must bemade directly with counsel.

Service of proceedings is discussed on page 24.

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Filing a small claims case in the TRATaxation Review Authority Regulations 1996

When the taxpayer elects to have the case heard in theTaxation Review Authority, he or she will complete aNotice of Claim, including ticking the appropriate boxon that form to indicate whether the case is to be heardby the Taxation Review Authority in its small claims orgeneral jurisdiction. If neither box is ticked, the casewill be proceed under the general jurisdiction.

The Notice of Claim is a cover sheet to be completed bythe taxpayer. Copies are available from any InlandRevenue office. The taxpayer must complete and filethree copies of both the Notice of Claim and the docu-ments outlined below, with the Taxation ReviewAuthority in Wellington. The filing fee is also payableat this time; it is $50 for claims to be heard in the smallclaims jurisdiction and $100 for claims to be heard inthe general jurisdiction. Filing may be done either inperson at the Authority’s office in Wellington or byregistered mail.

The Authority will travel to centres outside Wellingtonto hear cases.

The following documents must be attached to the Noticeof Claim:

• If a Disclosure Notice has been issued: The Adjudica-tor’s report (if one is issued), the Commissioner’sStatement of Position and the Taxpayer’s Statement ofPosition. The Notice of Response and the NOPA mayalso be attached at the taxpayer’s option.

• If no Disclosure Notice has been issued: The Adjudi-cator’s report (if one is issued), the Notice of Re-sponse and the NOPA.

Inland Revenue to consider small claimsapplicationThe Taxation Review Authority will advise InlandRevenue’s Litigation Management Unit that a Notice ofClaim has been received requesting that the case beheard as a small claim. It will also supply one copy ofthe notice and attached documents to the Unit.

The Litigation Management Unit will consider thedocuments, and advise the taxpayer if the Commissionerconsiders the case should be heard under the TaxationReview Authority’s small claims jurisdiction, or in someother authority.

Transfer to generaljurisdiction or High CourtSections 138M & 138N Tax Administration Act 1994

If the Commissioner considers that the case should notbe heard as a small claim, the Commissioner will applyfor the case to be transferred to the Taxation ReviewAuthority’s general jurisdiction or to the High Court.

The Commissioner will also have a similar discretion torequest transfer of cases to the general jurisdiction ofthe Taxation Review Authority or the High Court ifrecurrent amounts of less than $15,000 are involved.

The Commissioner will not meet the additional filingfees payable where a challenge is transferred to a higherjurisdiction.

The Commissioner may apply for a challenge filed withthe Taxation Review Authority to be transferred to theHigh Court. Each hearing authority also may transfer achallenge to one of the other hearing authorities, otherthan to the Taxation Review Authority’s small claimsjurisdiction. When a case is transferred from onehearing authority to another, the Commissioner will notpay the taxpayer’s costs of taking the case to the higherjurisdiction.

Hearings once filedThe Taxation Review Authority will arrange a hearingdate and advise the taxpayer and the Commissioneraccordingly.

RepresentationThe Taxation Review Authority is traditionally a forumwhere taxpayers can represent themselves or whereaccountants can represent their clients without the needto engage legal representation. This will continue to bethe case under the Taxation Review Authority’s smallclaims jurisdiction. Legal representation is permittedbut is not obligatory.

JudgesThe small claims procedure is part of the jurisdiction ofthe Taxation Review Authority and will be convened byTaxation Review Authority Judges.

ProcedureHearings will be conducted with a minimum of proce-dural formality, within the bounds of natural justice.Cases will be determined according to the law.

The evidence exclusion rule will also apply to smallclaims cases.

DecisionsDecisions will not be published, and will have noprecedential effect. It is likely that the Judge will oftengive an oral decision at the end of the hearing.

No right of appealThere will be no right of appeal for a case heard underthe small claims procedure.


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$100. Copies of the Statement of Claim and all accom-panying documents must be served on the Commis-sioner.

The Statement of Claim states the facts and propositionsof law which the taxpayer is relying upon in support ofthe claim, and the issues which the taxpayer considersrequire determination by the Court. All of these itemsmust be described in sufficient detail to fairly inform theCommissioner and the Court. If a disclosure notice hasbeen issued, the Statement of Claim may only refer tothose facts, evidence, issues and propositions of lawwhich were referred to in either party’s Statement ofPosition.

Commissioner’s response to thestatement of claimWithin 60 days from the date of service of the statementof claim and notice of proceeding, the Commissionermust file a statement of defence and serve it on thetaxpayer.

The Statement of Defence either admits or denies theallegations of fact contained in the Statement of Claim.It also sets out any further facts and evidence which theCommissioner considers are relevant to the issues, anypropositions of law which the Commissioner is relyingupon, and the issues which the Commissioner claimsrequire determination by the Court.

The Commissioner is limited to raising only those facts,evidence, issues and propositions of law which havebeen disclosed in either party’s Statement of Positionunder the disclosure notice procedure.

Service of proceedingsFor all proceedings, whether in the High Court or theTaxation Review Authority, any documents which arerequired to be served on the Commissioner must beserved in one of the following ways:

• by registered mail addressed to:

Litigation Management UnitInland Revenue DepartmentP O Box 2198WELLINGTON

• by delivery to the street address:

Ground FloorFreyberg BuildingAitken StreetWELLINGTON

When the Commissioner is required to serve courtdocuments on the taxpayer, service may be effected inany of these ways:

• personally• by sending a copy to the taxpayer by registered post to

the usual or last known place of abode or residence• by service on a solicitor who accepts service in writing

on behalf of the taxpayer• by effective delivery to an address for service supplied

by the taxpayer to the Commissioner.

Taxation Review Authoritygeneral jurisdictionSections 138B & 138C Tax Administration Act 1994

Amendments to Taxation ReviewAuthorities Act 1994This procedure is in general the same as the TaxationReview Authority’s small claims procedure. Theessential difference are:

• Decisions will be published.• Decisions may be appealed.• Decisions will be precedential.• The filing fee is higher ($100).

Transfer of cases from Taxation ReviewAuthority to the High CourtIn certain circumstances the Commissioner may applyto have a challenge filed by the taxpayer in the TaxationReview Authority transferred to the High Court. Forexample, the case may be extraordinarily complex or ofgeneral or public importance.

Application of evidence exclusion ruleThe evidence exclusion rule will apply to cases heard inthe general jurisdiction of the Taxation Review Author-ity.

TranscriptsIn certain circumstances involving complex and pro-tracted matters, the Authority may decide that a simul-taneous transcript of proceedings is required.

Filing a claim in the general jurisdictionof the Taxation Review AuthorityThe procedure for filing a claim in the general jurisdic-tion of the Taxation Review Authority is the same asthat outlined earlier for the small claims jurisdiction ofthe Taxation Review Authority.

High CourtSections 138B & 138C Tax Administration Act 1994and the High Court Rules

A new Part of the High Court Rules deals with taxdisputes. The rules prescribe the initiation of taxdisputes by Statement of Claim and ordinary proceedingprocesses, the evidence exclusion procedure and theavailability of interlocutory steps such as discovery andinterrogatories upon application to the Court.

Filing a case in the High CourtWhen a taxpayer elects for the case to be heard in theHigh Court, he or she must draft and file a Statement ofClaim in the form identified in the High Court Rules.The Statement of Claim should be filed in the office ofthe Court closest to where the taxpayer lives. Thetaxpayer must also file a notice of proceeding alongwith every Statement of Claim, and pay a filing fee of

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Test case proceduresSections 138P, 138Q Tax Administration Act 1994

When the Commissioner considers a challenge may bedeterminative of all or a substantial number of issuesinvolved in other challenges, that challenge may bedesignated a test case. Test cases are to be heard in theHigh Court.

When a test case has been designated, the Commis-sioner may stay proceedings on other challenges bynotifying the taxpayers concerned that:

• The test case is considered to be determinative of allor a substantial number of the issues in the challengeproposed to be stayed.

• The challenge proposed to be stayed has not yet beendetermined by the hearing authority.

The taxpayer may contest the stay at any time by issuinga notice requiring the challenge to be heard. TheCommissioner may, within 14 days of receiving thetaxpayer’s notice, apply to the High Court for an orderthat the challenge be stayed.

Statute (time) barSections 108, 108A, 108B Tax Administration Act 1994

Income Tax Act 1994Changes have been made to the statute (time) barprovisions. These provisions apply if four years havepassed from the end of the income year in which areturn was filed. The Commissioner cannot alter theassessment to increase the amount of tax after the fouryear period unless one of the following applies:

• The return was fraudulent or wilfully misleading.

• The return omitted income which was of a particularnature or was derived from a particular source.

The change to the statute (time) bar applies to returnsfiled on or after 1 April 1997.

Goods and Services Tax Act 1985If four years have passed from the end of the GST returnperiod for which a GST return was provided or GST

was assessed, the Commissioner cannot make anassessment or alter any assessment made to increase theamount of tax, unless the taxpayer has knowingly orfraudulently omitted to make a full and true disclosure.

If four years have passed from the end of the GST returnperiod for which a GST return was made under sec-tion 17 of the GST Act, or GST was assessed by theCommissioner under subsection (1A) or subsection (1B)of section 27 of the Act, the Commissioner cannot makean assessment or alter any assessment made to increasethe amount of tax.

Suspension of statute (time) barThe statute (time) bars in Sections 108 and 108A are tobe suspended if at any time before the expiry of thestatute (time) bar period, the taxpayer agrees to extendthe statute (time) bar by a period or periods of up to sixmonths.

Transitional issuesThere will be many audits and disputes that will nothave been resolved before 1 October 1996. These will beat various stages when the new procedures come intoeffect. Finalisation of these audits and disputes willdepend upon what stage they are at on 1 October 1996.

Audits under way but no assessment issuedRegardless of what stage the audit is at, if no furtherassessment has been issued for the particular period, thenew disputes resolution procedures will apply.

Assessment issued but no objectionreceived or received but not determinedThe taxpayer must file a notice of objection within thetwo month objection period. If the Commissioner eitherfully or partly disallows the objection and the taxpayerwishes to proceed with it, the taxpayer must do so underthe case stated procedures under Part VIII of the Tax

Administration Act. Neither the small claims rules northe disclosure stage of the new procedures will apply.

Objection received and fully orpartly disallowedIf the objection has been either fully or partly disallowedand the taxpayer wishes to proceed with it, the taxpayermust proceed to court under the case stated proceduresset out in Part VIII of the Tax Administration Act.Neither the small claims rules nor the new disputesprocedures will apply.

Objection disallowed but case notyet requestedA taxpayer who wishes to challenge the assessmentmust request a case stated under the case stated proce-dures set out in Part VIII of the Tax Administration Act.


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Questions and answersNotices of Proposed AdjustmentQ. Does a new NOPA have to be issued each time one

party changes the basis for issuing the initialNOPA?

A. If the change is a refinement of an earlier adjustmentno new NOPA will be needed. However, if a newadjustment is proposed or the basis for the firstadjustment has fundamentally changed then a newNOPA may be issued. This will be determined on acase by case basis.

Q. Will the adjustments referred to in NOPAs refer toincome figures or tax figures?

A. NOPAs will generally refer to income figures unlessotherwise specified e.g. the amount of penal taxproposed.

DeterminationsQ. Are determinations subject to NOPAs?

A. A determination which is a “disputable decision”may be disputed using a NOPA. Disputable decisionis defined in sec. 3(1) of the Tax Administration Act1994.

Q. Is a PAYE deduction determination an assessmentor a disputable decision?

A. A PAYE deduction determination is a disputabledecision. Either the employer or the employee maychallenge an assessment or reject a NOPA thatrelates to a PAYE deduction determination.

Assessments without NOPAsQ. Will a NOPA be issued in every case in which the

Commissioner does not agree with the return filedby the taxpayer?

A. No. Section 89C allows the Commissioner to issuean assessment without having to issue a NOPA in anumber of cases. The most common examples are:– the assessment equates with a return– if the Commissioner and the taxpayer agree on

the adjustment– if the Commissioner considers that the return

contains a simple or obvious mistake or oversight– if the Commissioner considers that a taxpayer

may hide assets or leave New Zealand to makecollection of the tax more difficult.

Q. What is a simple mistake or oversight?

A. The Commissioner will generally treat the followingas simple mistakes or oversights:– arithmetical errors,– transposition of numbers from one box to

another,– when a rebate has not been claimed which the

taxpayer is entitled to or was incorrectly calcu-lated, e.g. less than $30,875 rebate.

Q. Can an assessment be issued before the responseperiod for the NOPA has expired?

A. Technically section 89B(3) does not prevent theCommissioner from issuing an assessment before theexpiry of the response period. However in practicethe Commissioner will generally wait until the endof the response period before taking further action.

Q. In what circumstances will the Commissioner issuean assessment before the end of the response period?

A. The Commissioner will issue an assessment beforethe end of the response period if there is a risk to therevenue, such as if the taxpayer takes steps to leaveNew Zealand or to hide assets so that the collectionof tax is made more difficult. In this instance the filewill not be referred to the Adjudication Unit beforethe assessment is issued.

When the Commissioner and a taxpayer agree inwriting, and an assessment or reassessment is issuedafter 1 October 1996, it may be treated as having beenissued before 1 October 1996. In this case the objectionprocedures contained in Part VIII of the Act will apply.

An example of when the standard transitional proce-dures may not be followed is when an issue has beenobjected to in prior years but has not yet been deter-mined by the Courts. In such a case, it may be prefer-able that the same issue be dealt with under the samedisputes procedure. An alternative situation may be ifthe case is nearly finalised when the new disputesresolution procedures are implemented. The taxpayerand the Commissioner may agree that it would bepreferable to deal with the case under Part VIII.

Case stated request already receivedunder previous proceduresThe case will continue to be dealt with under the casestated procedures set out in Part VIII of the Tax Admin-istration Act.

Exceptions to the transitional provisionsSection 124A Tax Administration Act 1994

When the Commissioner and a taxpayer agree inwriting, and an assessment or reassessment has beenissued before 1 October 1996, it may be treated ashaving been issued after 1 October 1996. In this case thenew disputes process will apply.

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Q. What happens if the Commissioner issues anassessment without a NOPA and none of thesection 89C exceptions apply?

A. When the Commissioner has issued an assessmentand none of the exceptions in section 89C apply thetaxpayer can issue the Commissioner with a NOPAto dispute the assessment (section 89D(1)(b) of theTax Administration Act 1994).

Q. Can the Commissioner reaudit an assessment if thetaxpayer is deemed to have accepted the assessment?

A. Yes. The Commissioner can reaudit a taxpayer atany time to ensure an assessment is correct. Thisapplies to default assessments and ordinary assess-ments. The only limitation on the Commissionerreauditing the assessment is if the statute time barhas passed and the Commissioner proposes toincrease the amount of the earlier assessment.

Taxpayer initiated adjustmentsQ. If a taxpayer or agent wants an adjustment made to a

tax return or an assessment, does a NOPA have to begiven to the Commissioner in every instance?

A. No. If the Commissioner agrees with the adjustmentrequested by the taxpayer or agent, the taxpayer doesnot need to issue the Commissioner with a NOPA.This is because the Commissioner is still under aduty to ensure that the correct amount of tax isassessed. If the Commissioner does not agree, thetaxpayer or agent will have to issue a NOPA. Forthat reason, it is important to contact Inland Rev-enue as soon as possible after the assessment isissued to ensure that the taxpayer has sufficient timein which to issue a NOPA before the expiry of theresponse period.

Examples of when the Commissioner is likely toaccept requested adjustments include:– omitted interest, dividend or IR 12 certificates– omitted donation or housekeeper rebate claims

Q. What is the procedure for a taxpayer or agent torequest an adjustment?

A. A taxpayer or agent may write to the Commissioner,make a telephone enquiry or visit an Inland Revenueoffice. If the Inland Revenue officer agrees with therequest the adjustment will be made and an assess-ment issued. If the officer does not agree with therequested adjustment the taxpayer will be advised toseek independent advice or to issue a NOPA to theCommissioner. A blank NOPA form is available ifrequired.

Q. What should a taxpayer who receives a defaultassessment do ?

A. The only way that the taxpayer can dispute thedefault assessment is by filing a return for thatassessment period.

Q. Will an Inland Revenue officer help a taxpayer to fillin a NOPA?

A. No. It would not be appropriate for an InlandRevenue officer to assist a taxpayer in completing aNOPA and then to determine whether the contentsof the NOPA should be accepted or not. The InlandRevenue officer may advise the taxpayer to seekindependent advice.

Q. Is there a central address for NOPAs, Notices ofResponse and Statements of Position to be sent to?

A. No. Send the document to the address where theInland Revenue officer actioning the case works andmark it to the attention of that officer. If a taxpayerissues a NOPA to the Inland Revenue withouthaving discussed the proposed adjustment with anInland Revenue officer, the NOPA should be ad-dressed to the nearest Inland Revenue Office.

AgreementsQ. What is the effect of accepting an adjustment

proposed by the Commissioner?

A. If the adjustment is verbally accepted a taxpayer isnot precluded from subsequently challenging theadjustment. In an audit scenario, agreement willusually be recorded in writing. If the adjustment isaccepted in writing, the taxpayer may not furtherchallenge the adjustment.

Q. What happens if a taxpayer claims to have beencoerced into signing or did not know the effect ofwhat was agreed to in writing?

A. When a formal written agreement is entered into, astatement of the effect of the agreement will beincluded in the written document. The taxpayer willbe advised to seek advice if he or she does notunderstand the document - Inland Revenue will notcoerce taxpayers into signing agreements.

Q. If the taxpayer agrees with the adjustment, will he orshe always be required to sign a written agreement?

A. No. However, Inland Revenue recommends thattaxpayers do sign an agreement, as acceptance inwriting brings finality to the issue.

Q. What is the form of the written agreement?

A. Written agreements could include:

– a letter requesting the Commissioner to make anadjustment.

– a simple standard form for simple adjustments.

– a letter of agreement tailored to meet the require-ments of the issue being agreed upon. We expectthat tailored agreements will be needed for morecomplex adjustments or when there are multipleadjustments being agreed upon, perhaps coveringmultiple types of taxes or multiple revenueperiods.


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Q. How long is the response period - two calendarmonths or 60 days?

A. The response period is defined as two monthsstarting on the date of issue of the originatingdocument. For example, the response period for aNOPA issued on 15 February 1997 expires on15 April 1997.

Q. Will the response period be strictly adhered to?

A. Yes. The Commissioner has no authority to grant anextension of time, and exceptional circumstances arelikely to be rare.

Exceptional circumstancesQ. What happens if a taxpayer issues a NOPA after the

two month response period and the Commissioneragrees to the adjustments requested by the taxpayer?

A. The Commissioner has a duty to ensure that assess-ments are correct. If the Commissioner considersthat an adjustment is required, he will issue anassessment incorporating the adjustment provided itmeets the Commissioner’s policy on the applicationof section 113, TAA. The request will not be treatedas an acceptance of a late NOPA, but a recognitionby the Commissioner of his duty to ensure thatassessments are correct in terms of section 113.

Q. What happens if a taxpayer issues a NOPA after thetwo month response period and the Commissionerdoes not agree to the adjustments requested by thetaxpayer?

A. The Commissioner cannot accept a late NOPAunless exceptional circumstances apply. If excep-tional circumstances do not apply, the adjustmentscannot be made.

Q. What are exceptional circumstances?

A. Exceptional circumstances are events or circum-stances beyond the control of the taxpayer thatprovide the taxpayer with a reasonable justificationfor not issuing the NOPA or Notice of Responsewithin the response period. If the taxpayer has anagent, an act or omission of the agent will notamount to an exceptional circumstance unless theact or omission was beyond the control of the agent,could not have been anticipated and could not havebeen avoided by compliance with accepted standardsof business organisation and professional conduct.

The following situations are not exceptional circum-stances:

– A taxpayer completes her own GST returns buther agent completes her income tax return. Anadjustment is made to a GST return which thetaxpayer does not dispute. The adjustment willaffect the taxpayer’s income tax position but thetaxpayer does not discuss the issue with heragent. When the agent completes the taxpayer’sincome tax return six months later, he discovers

Q. Who can sign an agreement?

A. The taxpayer or the taxpayer’s authorised agent cansign the agreement.

Q. If an agent signs the agreement will an authority toact be required?

A. If an agent regularly acts for the taxpayer and hasbeen involved in the pre-agreement discussions it isunlikely that proof of authority to act would berequired. However, the agent would sign the agree-ment as duly authorised agent. An Inland Revenueofficer may ask for proof of authority to act if theagent has not previously been acting for that tax-payer or the agent has had no involvement in earlierdiscussions.

Q. What should an agreement contain?

A. There are a number of items that should be includedin a written agreement. These are: the taxpayer’sname and IRD number, the date, the tax type inissue, the period in issue, details of the adjustmentagreed upon, the implications of the agreement, thename and designation of the Inland Revenue officersigning the agreement, and the taxpayer’s or agent’ssignature.

Q. Can the Commissioner amend an assessment for anissue following written agreement or deemedacceptance of that issue?

A. The Commissioner has an overriding duty to ensureassessments are correct, provided that this functionis completed within the statutory four year timelimit. A written agreement does not generally limitthe Commissioner’s ability to subsequently amendan assessment.

Once a NOPA, Notice of Response, or a Statementof Position is accepted or deemed accepted, theCommissioner may not subsequently amend issuescontained in it. Once an issue is determined byformal disputes procedures, under either the new orthe old procedures, that determination is final unlessthe Commissioner has been wilfully misled or afraud has been committed.

Extensions of timeQ. If a taxpayer is concerned that the response period

may expire can the Commissioner grant an exten-sion of time?

A. The legislation does not allow the Commissioner togrant an extension of time. Before the expiry of thetwo month period the Commissioner has no power toconsider a request from the taxpayer for permissionto issue a late notice. The Commissioner may onlyconsider an application for a late notice to be treatedas having been received in time after the responseperiod has expired. The notice will only be treated ashaving been received within the response period ifthe exceptional circumstances test is met.

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the GST adjustment and wishes to issue a lateNotice of Response well outside the responseperiod. This is not an exceptional circumstancebecause it was not beyond the taxpayer’s control.She could have taken professional advice whenthe GST adjustment was made, but she chose notto.

– A taxpayer files a return but doesn’t claim arebate to which he is clearly entitled. Eightmonths later, he discovers his error and asks theCommissioner to allow his rebate. The Commis-sioner agrees that the taxpayer is clearly entitledto the rebate and makes the adjustment. TheCommissioner is not required to considerwhether exceptional circumstances occurred inthis scenario because he is under a duty to ensurethat assessments are correct.

– A taxpayer is selected for an audit. During thecourse of the audit, the taxpayer is sent a numberof letters outlining the matters being investigatedand speaks to the investigator several times onthe phone and is told that a NOPA is about to beissued. The taxpayer then decides to traveloverseas for six months. She does not appointanyone to handle her tax affairs. The Commis-sioner issues the NOPA and the taxpayer doesnot issue a Notice of Response within the re-sponse period. An assessment is issued. Whenshe returns, three months after the responseperiod has elapsed, she issues a Notice of Re-sponse. The taxpayer does not satisfy the excep-tional circumstances test. It was not beyond hercontrol. She was aware that she was beingaudited and should have appointed someone tomanage her tax affairs if she was not going to beable to do so herself. Alternatively, she couldhave made arrangements with the Inland Rev-enue officer to suspend the issue of the NOPAuntil after her return.

– A taxpayer is audited and a dispute arises as tothe deductibility of certain losses. The Commis-sioner considers that the losses were not deduct-ible and issues a NOPA proposing to disallow thelosses. The taxpayer contacts his agent whoadvises him that the losses are not deductible.The taxpayer does not issue a Notice of Responseso is deemed to have accepted the adjustmentdisallowing the losses. An assessment is issued.The following year the Court of Appeal issues ajudgment which makes it clear that the losseswould have been deductible. The taxpayerrequests the Commissioner to accept a lateNotice of Response. The Commissioner does notaccept that this is an example of exceptionalcircumstances. It was within the taxpayer’scontrol to issue the Notice of Response within thetime frame required, or alternatively it waswithin the agent’s control to advise the taxpayerthat there was a pending appeal which may affect

the taxpayer’s affairs. Section 89I overridessection 113 in these circumstances.

– A taxpayer is issued with a NOPA. Two weeksbefore the response period ends, the taxpayer isadmitted to hospital for a hip replacement whichshe has scheduled some months previously. Thetaxpayer does not issue a Notice of Responsewithin the response period and seeks to rely uponher hospitalisation as an exceptional circum-stance. This is not an exceptional circumstance.The failure to issue a Notice of Response withinthe response period was not due to an eventbeyond the taxpayer’s control. The taxpayer hadtime to organise for her tax affairs to be lookedafter or could have advised the Commissioner atan earlier time that she would be unable to runher tax affairs at that time.

The following situation would count as an excep-tional circumstance:

– A taxpayer is issued with a NOPA. Two daysbefore the response period ends, the taxpayersuffers a severe heart attack and is not able toprovide a Notice of Response. Three monthslater, the taxpayer is well enough to go throughhis tax affairs and wishes to issue a late Notice ofResponse. The Commissioner accepts the Noticeon the basis that the failure to respond in timewas due to an exceptional circumstance. TheNotice is treated as having been received in timeand progresses through the new procedures inthe usual manner.

ConferenceQ. What is the status of pre-assessment discussion in

evidence?

A. Notes of pre-assessment discussions may be used inevidence. The discussions may also be held on awithout prejudice basis, but if the taxpayer’s expla-nations vary widely this may affect the credibility ofthe taxpayer.

Q. In what circumstances will the Conference stage bedispensed with?

A. If the Inland Revenue officer considers that thetaxpayer or the agent is employing delaying tactics,approval may be sought to dispense with the confer-ence. However if a taxpayer or agent is not availablebecause of authentic work commitments, alternativeconference arrangements may need to be consideredsuch as the use of conference calls. In addition,suspension of the statute (time) bar may be sought.

Q. Who decides whether to dispense with the Confer-ence stage?

A. If the Inland Revenue officer considers that theconference stage should be dispensed with approvalwill be sought from his or her reporting officer. Ifthe reporting officer agrees that the conference stage


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to the other party at an early stage. The disclosure ofall the information being relied upon by each partymeans both parties are better able to determine thecorrect amount of tax to be paid and can do so on amore timely basis.

Q. What is evidence exclusion?

A. The evidence exclusion rule limits the parties to onlythose facts, evidence, issues and propositions of lawthat have previously been disclosed to the other partyin a Statement of Position. The evidence exclusionrule prevents either party from attempting to admitfurther information at the last minute.

Q. When does the evidence exclusion rule apply?

A. The evidence exclusion rule only applies when adispute is taken to court. However, the point in timeat which final disclosure must occur is at the State-ment of Position stage.

Q. How will the evidence exclusion rule be invoked?

A. Evidence exclusion is instigated by the DisclosureNotice. The Commissioner will issue a DisclosureNotice which requires the taxpayer to provide aStatement of Position within two months of the dateof issue of the Disclosure Notice. If the Commis-sioner has issued the NOPA he will provide hisStatement of Position with the Disclosure Notice. Ifthe taxpayer has issued the NOPA the taxpayer mustprovide a Statement of Position first.

Q. What happens if a taxpayer discovers new materialrelevant to the case after the Disclosure Noticestage?

A. All requests for additional information to be addedto the Statement of Position after the DisclosureNotice stage should be directed to the Inland Rev-enue officer handling the case. The officer will thendetermine whether the Commissioner should acceptthe new information. If the officer agrees to acceptthe new information it is deemed to be part of thetaxpayer’s original Statement of Position in accord-ance with section 89M(14). If the file has beenpassed to Adjudication the officer will forward thenew information on to the Adjudication Unit to beadded to the original Statement of Position. If theofficer does not agree to accept the new informationand the assessment is subsequently challenged incourt the taxpayer may apply to the court for leave toinclude the new information.

Q. Does the evidence exclusion rule apply to informa-tion held by a third party?

A. Yes. It is important that both parties produce all theinformation which they hold or know of which leadsthem to the conclusion that their position is correct.

Q. What factors will an officer consider in decidingwhether to accept additional information after theStatement of Position?

should be dispensed with that decision will berelated to the taxpayer forthwith.

Q. Can further discussions or conferences be held afterthe Statements of Position are exchanged?

A. Yes. In some cases once Statements of Position havebeen exchanged, further discussion may resolve oneor more of the outstanding issues. If all the issuesare resolved, the appropriate assessment will beissued. If all of the issues are not agreed at the postdisclosure discussion, only those unresolved issueswill be sent to Adjudication for final determination.

Disclosure NoticesQ. Will there be a Disclosure Notice in every case?

A. The legislation states the Commissioner may issue adisclosure notice. In practice the Commissioner willissue a disclosure notice in most cases if the disputecannot be resolved before the adjudication phase.There will be limited exceptions such as if thepersonal safety of an informant is at risk or ifinvestigations into an alleged offence may bejeopardised by full disclosure.

Q. When can a Disclosure Notice be issued?

A. A disclosure notice can be issued at any time on orafter the issue of a NOPA.

Q. If a Disclosure Notice is issued before the NOPAresponse period expires, does a Notice of Responsestill have to be given within the response period?

A. Yes. The Notice of Response must be given withinthe response period for the NOPA and the Statementof Position must be given within the response periodfor the Disclosure Notice.

Statement of PositionQ. What happens if the taxpayer’s Statement of Posi-

tion does not contain all the requisite informationlisted in section 89M(6)?

A. The Statement of Position will be invalid. If a validStatement of Position is not issued within theresponse period, the issues cannot be disputed anyfurther, unless exceptional circumstances apply. Thetaxpayer will be deemed to have accepted theCommissioner’s NOPA or Statement of Position asthe case may be. If possible, the Commissioner willcontact the taxpayer and advise that the Statement ofPosition is deficient, provided there is still timewithin which a valid Statement could be issued.

Evidence exclusionQ. What is meant by “all cards on the table”?

A. The ‘all cards on the table’ approach is designed toensure that all the information relied upon by eachparty to support their respective position is disclosed

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A. The officer will consider the same factors that acourt will have to consider if an application wasmade to include the information at hearing stage(section 138G(2)). Those factors are: whether withdue diligence the information could have beendisclosed earlier, and whether the admission of thatinformation is necessary to avoid manifest injusticeto the Commissioner or the taxpayer.

Q. What is the procedure for asking a court to acceptnew evidence?

A. The TRA operates in accordance with the DistrictCourt Rules which require a formal application to bemade accompanied by an affidavit if the parties arerepresented by Counsel. If the taxpayer is unrepre-sented an informal oral application or letter may beallowed at the discretion of the Authority. Forproceedings in the High Court, the High Court rulesmust be followed.

Q. Does the evidence exclusion rule also apply to theCommissioner?

A. Yes. Only those facts, evidence, issues or proposi-tions of law raised in the Commissioner’s or thetaxpayer’s Statement of Position can be used by himto support the assessment. If the Commissionerdiscovers new information after completing hisStatement of Position, the Commissioner may addthat information with the consent of the taxpayer orhe may apply to the Court to have the new informa-tion added. In any application to the Court theCommissioner must meet the same test as thetaxpayer for the addition of new information.

Q. Do expert opinions, valuations, texts etc. need to bedisclosed in the Statement of Position?

A. Yes. All the information that a party seeks to rely onin support of their position must be disclosed at theearliest stage. This is to encourage resolution of anydisputes. Encouraging this information to be ob-tained and disclosed earlier may lead to one party’sposition being recognised as the correct position at amuch earlier stage.

Q. How should the information be disclosed?

A. The legislation requires that an outline of theinformation be given in sufficient detail to fairlyinform the Commissioner or the taxpayer as the casemay be. The Commissioner considers that thismeans an outline of all the information givingsufficient detail to ensure that both parties canidentify each piece of information. For example, alist of documentary evidence providing a descriptionof each document, the date of the document and theparties involved would be a sufficient outline toeasily identify the document. An example of how theCommissioner proposes to disclose the informationavailable is provided in the appendix.

Q. Is it possible that more information will be disclosedin the Statement of Position than will actually beproduced in Court?

A. Yes. The information disclosed in the Statement ofPosition is that information which a party has reliedupon in support of their position. It may be that ifthe dispute progresses to Court not all of thatinformation will need to be produced in evidence.

Q. Can the taxpayer raise matters contained in theCommissioner’s Statement of Position in any Courtchallenge to a disputable decision ?

A. Yes. In any Court challenge to a disputable decision,both the taxpayer and Commissioner can raisematters in both their own and the other party’sStatement of Position.

Q. What is due diligence in the context of the evidenceexclusion rule?

A. The first limb of the exception to the evidenceexclusion rules requires a person to have exerciseddue diligence in trying to obtain the facts, evidence,issues and propositions of law before the date of thechallenge. In that context a person will have exer-cised due diligence if that person has taken allreasonable care in the circumstances of the case andtaking into account their personal situation.

AdjudicationQ. How does the taxpayer’s position get put fairly to the

Adjudication Unit if it is being sent by the InlandRevenue officer? Can the taxpayer comment on thereport prepared by the investigator? Can the tax-payer prepare his or her own report?

A. The file that is sent to the Adjudication Unit com-prises the NOPA, Notice of Response, Statements ofPosition and a schedule of adjustments remaining indispute. If there is a significant amount of documen-tary evidence it is possible that not all the evidencewould be included in the file that is sent to the Unit.

Before the file is sent to the Adjudication Unit aletter will be sent to the taxpayer enclosing a list ofall the material in the file. If the case is one in whichthere is significant evidence and not all of it hasbeen included in the file, the letter will ask thetaxpayer to advise whether any other disclosedevidence should be included. It is important to notethat only disclosed evidence can be sent to theAdjudication Unit. Further, because of the disclosureprocedure there should be nothing in the file whichthe taxpayer is not already aware of. The file issimply a collation of material used by the parties insupport of their respective positions. The purpose ofsending the taxpayer a list of what will be sent toAdjudication is to ensure the openness of theAdjudication process.

Q. Will the Adjudicator talk to the Inland Revenueofficer without notifying the taxpayer?

A. No. The Adjudicator’s role is to determine thetechnical and legal correctness of the proposedadjustment based on the position put by the Inland


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Position, does the evidence exclusion rule preventthese documents from being raised in court?

A. No, the evidence exclusion rule does not preventthese documents from being raised in Court. TheAdjudicator’s report and assessment may be used incourt as the final consideration of the reasons for theassessment, i.e. the disputable decision itself.

Q. How long will the Adjudicator take to issue adecision?

A. We anticipate that an Adjudicator’s decision will bemade within 4-6 weeks of receiving the file, subjectto workloads. In less complex cases a decision maybe able to be made in less time but in complex casesa decision may take longer.

Q. If the Adjudicator does not agree with the InlandRevenue officer’s position will the officer be able to‘appeal’ from the Adjudicator’s decision?

A. No. The Commissioner has delegated his authorityto determine disputed adjustments to the Adjudica-tor. The Inland Revenue officer and the Adjudicatorare both acting under the Commissioner’s authority.The Commissioner can only have one view of thelaw. The Adjudicator’s decision will therefore befinal.

Q. Will an Adjudicator follow the Commissioner’spolicy in all cases?

A. The Adjudicator will seek to determine whichposition is legally correct. If this does not accordwith a previous interpretation statement, the Adjudi-cator will not follow that interpretation. We expectthat recent interpretation decisions will be in accordwith the legislation and will be correct. In additionthere would have been extensive consultationprocesses used before their publication.

Q. Can a taxpayer contact the Adjudicator during theAdjudication phase?

A. No. To retain independence and objectivity anycontact will be rare. If contact is necessary it will beinitiated by the Adjudicator. An Adjudicator willdetermine if any contact needs to be made. Anycontact will be in writing and a copy will go to theother party to the dispute; if a meeting is proposedboth parties will be invited to attend. The taxpayeror agent’s point of contact will remain the InlandRevenue officer they have been dealing withthroughout the dispute.

Q. What happens if a taxpayer wants to add moreinformation to their Statement of Position - shouldthe information be sent straight to the Adjudicator?

A. No. The information should initially be sent to theInland Revenue officer dealing with the case. Thatofficer and his/her reporting officer will decidewhether to agree to its inclusion in the Statement ofPosition in accordance with section 89M(14). If theofficer agrees to its inclusion, the information will

Revenue officer and the taxpayer. The Adjudicator isnot to do further investigation. Contact between theAdjudicator and the Inland Revenue officer ortaxpayer should rarely be necessary. If it is necessaryfor a point of clarification the Adjudicator willalways make contact in writing. The same procedurewill apply when the Adjudicator wishes to talk to thetaxpayer. A copy of the written request and a copy ofthe response will always be sent to the other party.In extraordinary cases the Adjudicator may need tocall a meeting to clarify an issue. In this case boththe Inland Revenue officer and the taxpayer willhave the opportunity to be present at such a meeting.

Q. What will the Adjudicator base his or her decisionon?

A. The Adjudicator’s decision will be based on theinformation provided in the Statements of Position.The Adjudicator will consider the correct applicationof the law and determine whether the facts of thecase in question meet the requirements of thelegislation. The Adjudicator’s role is to achieve thelegally correct answer based on the informationpresented in the file.

Q. How will the Adjudicator decide on cases when thelaw is unclear? Will the Adjudicator let the Courtsdetermine the issue?

A. The Adjudicator’s concern is to ensure that theresulting assessment is legally sound. The Commis-sioner must have an opinion on the application ofthe law to be able to assess the amount of tax. Hewill do this by determining the better view of the lawand applying it to the facts.

Q. How will the parties be notified of the Adjudicator’sdecision?

A. The Adjudicator will prepare a brief report indicat-ing what the Commissioner’s final decision is oneach proposed adjustment. (Note that the Adjudica-tor will not review previously agreed adjustments).A copy of the report will be sent to both the taxpayerand the Inland Revenue officer. If the Adjudicatoragrees with the proposed adjustments or any ofthem, an assessment will be raised in due course.

Q. Can the taxpayer discuss the Adjudicator’s reportwith the Adjudicator?

A. No. If there is any ambiguity in the Adjudicator’sreport, then the taxpayer can raise the matter withthe Inland Revenue officer involved in the pre-adjudication stage in the first instance. It will be upto this person to clarify anything in the Adjudica-tor’s report. Contact with the Adjudicator will not bepossible as the taxpayer has further rights to chal-lenge the decision. In addition, contact with theAdjudicator may compromise the Adjudicator’simpartiality.

Q. As both the Adjudicator’s report and the Notice ofAssessment are generated after the Statement of

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be sent to Adjudication. If the officer does not agreeto include the information the Adjudicator will notbe influenced by information which was not avail-able to the officer at the time the officer made his orher decision. If the Adjudicator decides against thetaxpayer and the taxpayer subsequently wants tochallenge the assessment in court the taxpayer canthen request that the Court allow the new informa-tion to be admitted.

Q. What happens if a new Court decision is releasedwhich is relevant to an issue which is still at Adjudi-cation?

A. If neither party has mentioned the underlyingprinciples raised in the new case law, and they areseen as being material, the file will be sent back tothe Inland Revenue officer for further discussionwith the taxpayer. If the underlying principles havebeen mentioned in the Statements of Position, theAdjudicator will take the implications of the newcase into account without the need to refer it back tothe Inland Revenue officer.

Q. What happens if there is a conflict of fact dependingupon the issue of credibility?

A. The Adjudicator will make a determination based onall the information and material presented.

Small claimsQ. What does precedential mean in the context of the

small claims jurisdiction of the TRA?

A. A case is likely to be considered precedential if it islikely to affect the tax treatment used by othertaxpayers or if it is likely to affect the tax treatmentused by the disputant taxpayer in other tax periods.

Q. Will decisions from small claims be published?

A. No. Decisions from the small claims jurisdiction ofthe TRA are non-precedential so will not be pub-lished.

Q. What happens if the taxpayer elects small claims atthe NOPA stage because the tax in dispute is lessthan $15,000 but with penalties and penal tax itexceeds $15,000? Can a taxpayer still file in thesmall claims jurisdiction?

A. Yes. The $15,000 jurisdiction relates to the substan-tive tax in dispute, not to the penalties.

Q. What if the taxpayer elects small claims and subse-quently changes her/his mind?

A. The taxpayer’s election to have a case treated as asmall claim is irrevocable. However, if the casechanges so that the small claims jurisdiction is nolonger appropriate the Commissioner or the TRAmay apply to have the case transferred to anotherjurisdiction.

Q. Is the small claims jurisdiction only $15,000 for alltypes of taxes or for each revenue?

A. The jurisdictional limit is $15,000 per case, not perrevenue type. Hence even if there are three types oftaxes in issue for the same taxpayer, if the combinedtax in dispute is greater than $15,000 the disputecannot be heard in the small claims jurisdiction.

Q. If a disputed GST adjustment affects the taxpayer’sincome tax position can the taxpayer use the smallclaims procedure to challenge both adjustments?

A. The answer will depend on the facts and issues inquestion. However, it is at least possible that the casemay not be precedential but may be consequential.

Q. Will a loss adjustment be able to be taken to smallclaims?

A. Yes. The new section 13B(2)(b) of the TaxationReview Authorities Act 1994 includes loss adjust-ments within the jurisdiction of the small claimstribunal.

Q Can the Commissioner reject a small claims elec-tion?

A No. The Act does not allow the Commissioner toreject a small claims election if that election is madein the taxpayer’s NOPA or Notice of Response.However, if the dispute proceeds to court, theCommissioner may make an application to have thecase moved to a different jurisdiction.

The transfer will be requested if the case involvesprecedential issues, or if the facts are not clear or arestill in dispute. The TRA could also transfer the caseto another jurisdiction. Such transfers override thetaxpayer’s election.

Q. Will a disclosure notice be issued for all smallclaims cases?

A. When the facts and issues are clear, and there is noadded benefit from using the disclosure noticeprocedure, a disclosure notice may be dispensedwith.

Statute (time) barQ. Has the statute (time) bar changed for GST returns?

A. No. For GST returns the statute (time) bar runs fromthe end of the return period for which the return isprovided or, if an assessment has been issued, fromthe date of the assessment.

Q. How does the taxpayer waive the statute (time) bar?

A. The taxpayer must sign a prescribed form setting outthe taxpayer’s name and IRD number, the revenuetype and tax period in question, the date on whichthe statutory period commenced and the date onwhich it is due to expire, and the period of thesuspension, being a period of up to 6 months. Anynumber of suspensions can be agreed to providedthat the total period of the suspension is no longerthan six months from the date on which the statutoryperiod would otherwise have expired.


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Q. Some contracts fall over after the payment of duty ismade. In such circumstances a duty refund iscurrently sought by the taxpayer making a writtenapplication for a refund. Does a taxpayer now haveto issue a NOPA?.

A. If the Inland Revenue officer agrees to refund theduty a NOPA will not need to be issued; the writtenapplication for a refund will suffice. However, if theInland Revenue officer does not agree to the refund aNOPA must be issued.

Test casesQ. Can an Inland Revenue officer negotiate with the

taxpayer not to issue an assessment until after thetest case is heard?

A. Subject to the statute (time) bar, nothing precludes ataxpayer and an Inland Revenue officer fromreaching an agreement to delay an assessment untilafter a test case is heard.

Q. When will test cases be identified?

A. The Commissioner will not be in a position to knowthat the outcome of one case will affect a number ofother cases until there have been two or more casesfiled in Court on the same issue and raising the samearguments. Consequently, the Commissioner canonly designate a test case and stay the other casesonce they have been filed in court.

Penalties and prosecutions[Penal tax refers to penalties that apply for returns filedup to the 1997 income year, i.e. 31 March 1997 forstandard balance date taxpayers. Reference to shortfallpenalties means those penalties that apply from 1 April1997 as a result of the new compliance and penaltyprovisions. These will be detailed in a separate TIB. It islikely that both penalty systems will operate for anumber of years while tax audits cover both pre- andpost-1 April 1997 periods].

Q. If the substantive issues have been agreed to but notany applicable penal tax or shortfall penalties, does aseparate NOPA have to be prepared for theseadjustments?

A. Yes. If penal tax or shortfall penalties are proposedand there is no agreement as to chargeability oramount, a NOPA will be issued.

Q. Does the Adjudication Unit decide on penal tax orshortfall penalties, or only the substantive adjust-ments?

A. If penal tax or shortfall penalties are in issue andagreement has not been reached the issue willusually be referred to Adjudication as for any otherdisputed adjustment.

Q. What penalties will be referred to in the NOPA?

A. Penal tax or shortfall penalties adjustments will bereferred to in detail. If it is considered that penal tax

Q. In what circumstances does the Commissionerconsider a taxpayer is likely to waive the statute(time) bar?

A. There are two probable situations - firstly when thedispute is not resolved and more time would allowcompletion of the disputes resolution procedureswith the mutual agreement of the parties rather thanthe Commissioner having to issue an assessment,and secondly if there is another case before thecourts which is likely to resolve the issue in thecurrent dispute.

Duties assessmentsQ. Do the exclusions contemplated in section 89C take

into account duties assessments?

A. Yes. Section 89C(a) allows the Commissioner toissue an assessment that corresponds with a taxreturn provided by the taxpayer. A tax return isdefined as any form or document that a taxpayer isrequired by law to complete and provide to theCommissioner. Consequently any document togetherwith the prescribed form (IR 664) which must besubmitted for stamping will be within the definitionof a tax return. The Commissioner can thereforeissue an assessment without first issuing a NOPA.

Q. What happens if the self assessed duty is not correct?

A. As with other types of assessments the Commis-sioner can issue an assessment without first issuing aNOPA in limited circumstances: if the returncontains a simple mistake or oversight, if thetaxpayer agrees with the adjustment or if the Com-missioner thinks there is a risk to the revenue. In allother cases the Commissioner must first issue aNOPA before issuing an assessment which differsfrom that returned by the taxpayer.

Q. What happens if the duty payable has not beencalculated?

A. If the document is presented for stamping and theprescribed form (IR 664) does not have an amount ofduty payable calculated the Commissioner will issuean assessment based on the information provided.The Commissioner does not need to issue a NOPAbecause the assessment will correspond with theinformation provided.

Q. Does the taxpayer have to issue a NOPA to chal-lenge a stamp duty assessment?

A. In the first instance the taxpayer should approachthe Inland Revenue officer for an explanation of thealtered assessment or to seek a change to the as-sessed duty. If the Inland Revenue officer does notagree with the change or the taxpayer does not likethe explanation a NOPA must be issued by thetaxpayer within the response period to dispute theduty assessed. The Commissioner is most likely tohave issued an assessment in terms of section 89C(a)or (b).

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or shortfall penalties may apply at the time theinitial NOPA is prepared, they will be referred to inthe initial NOPA. However, if it only becomesapparent as the audit progresses that penal tax orshortfall penalties could apply, a further NOPA maybe issued dealing with the penal tax or shortfallpenalties. Other consequential adjustments such asUse of Money Interest, additional tax, etc. will notbe detailed in the NOPA. In the case of additionaltax, Use of Money Interest and incremental tax,these figures will only be able to be determined oncethe dispute has been resolved and an assessmentissued, as they continue to accrue until the date theoutstanding tax is paid.

Payment of tax owingQ. If there is more than one adjustment but some are

agreed to and others are not, can the taxpayer makea voluntary payment to avoid penalties?

A. Yes. Under the new disputes procedures an assess-ment is not raised until all issues relating to thatassessment are resolved. If the due date for paymentis set as the original due date, significant additionaltax may be incurred by the time all the issues areresolved. In that instance a taxpayer can make avoluntary payment at any time.

Q. When will the due date for payment of tax, penaltax/shortfall penalties be mentioned?

A. These will generally be covered in the NOPA and/orthe referral cover sheet to Adjudication. For returnsfiled for the year starting 1 April 1997, a new duedate will always be set but interest will be payablefrom original due date. Further details will becovered in the upcoming TIB on the new TaxpayerCompliance and Penalties regime.

MiscellaneousQ. What are propositions of law?

A. A proposition of law is a statement regarding theapplication of the law. It may be based on statutes(tax laws) or case law, or other opinion. Propositionsof law may also include a statement on the applica-tion of the law that has not been considered by thecourts previously. Propositions of law should statethe authority for the proposition relied upon, e.g. theparticular case it is drawn from.

Q. What happens if the taxpayer issues a NOPA, Noticeof Response or Statement of Position, but theCommissioner does not receive it?

A. Initially the Commissioner may require some prooffrom the taxpayer that a Notice was actually issued,particularly if the document was a NOPA. In thecases of Notices of Response or Statements ofPosition the Commissioner will be aware that thereis a dispute in progress and will be monitoring thepassing of the response period. If the taxpayer has

issued a Notice, and the Commissioner has taken allreasonable steps to ensure that he receives it but hedoes not actually receive it, the Commissioner mayapply to the Court for approval to respond outsidethe response period.

Q. What happens if the taxpayer does not receive theCommissioner’s NOPA, Notice of Response orDisclosure Notice?

A. All Notices sent out by the Commissioner will berecorded in the Inland Revenue computer system.The date of issue recorded in the computer systemwill be used as verification of the date of issue. TheCommissioner will endeavour to advise the taxpayerwhen a notice is about to be issued. If the taxpayerdoes not receive the Notice, the taxpayer can file aNOPA and apply to the Commissioner for it to beaccepted outside the response period due to excep-tional circumstances.

In the case of the Commissioner’s Notice of Re-sponse it is unlikely that failure to receive willamount to exceptional circumstances because thetaxpayer will be aware that there is a dispute inprogress and the status of the dispute. In thatinstance failure to verify whether the Notice hasactually been issued may not give rise to exceptionalcircumstances.

In the case of a Statement of Position, failure to issuethe Statement of Position within the response periodprevents the taxpayer from proceeding further - thetaxpayer is deemed to have accepted the Commis-sioner’s position, unless he or she successfully seeksan extension under section 89M(11).

Q. Will the Commissioner acknowledge receipt of thetaxpayer’s notices?

A. Yes. Procedures have been established for promptacknowledgment.

Q. What will the Commissioner do if the taxpayerissues a NOPA or Notice of Response which doesnot meet the requirements of the legislation?

A. If the Notice is manifestly inadequate it will beinvalid. The Commissioner will contact the taxpayerif possible, and advise that the Notice cannot beaccepted and that a further Notice should be issuedwithin the response period. If the response periodhas expired the only avenue open to the taxpayer isto make an application for exceptional circum-stances. However, if the taxpayer has prepared aninadequate Notice previously and has elected not toseek advice to prepare a valid Notice it is unlikelythat this would, on its own, amount to exceptionalcircumstances.

Q. If the Commissioner does not advise the taxpayerthat the NOPA or Notice of Response is invalidwithin the taxpayer’s response time, will it meet theexceptional circumstances test if a valid notice isprovided later?


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A. Approval to apply section BB 9 will be sought at theNOPA stage. Approval will be given by eitherNational Office or Service Centre management. Ifthe application of section BB 9 is disputed by thetaxpayer the final decision will in most cases bemade by the Adjudication Unit. If the application ofsection BB 9 is not disputed by the taxpayer finalapproval will be given by the Team Leader.

Q. If the taxpayer does not agree with the proposedadjustment can the resolution process be put on holdwhile the taxpayer seeks a binding ruling?

A. No. An application for a binding ruling can not bemade while the Commissioner is undertaking anaudit. However the dispute resolution process may beput on hold while advice is sought from otherexperts both within and outside Inland Revenue.

A. No, because the requirements for exceptionalcircumstances are specifically set out in the legisla-tion. There is adequate material available fromInland Revenue which explains to a taxpayer how tocomplete a valid notice.

Q. If the Commissioner issues a disclosure notice soonafter a NOPA, is the conference stage dispensedwith?

A. The need for a conference will depend on the issuein question. The purpose of the new procedure is toresolve disputes. If a conference is likely to helpresolve the dispute the conference stage will not bedispensed with.

Q. In tax avoidance cases at what stage will the InlandRevenue officer have to seek approval to use sectionBB 9?

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Notices issued by Inland Revenue - examplesThe following are sample forms that will be issued bythe Commissioner. The sample forms contain the sub-headings that are stated in the legislation, and that willbe used for each type of form. They will be generated onPersonal Computers, using pre formatted templates.

The length of each document will depend on thenumber of issues involved.

Pre printed NOPA, Notice of Response and Statement ofPosition forms are available from Inland Revenue foruse by taxpayers and agents.

NOTICE OF PROPOSED ADJUSTMENT

TAXPAYER’S NAME:

IRD NUMBER:

DATE OF ISSUE:

PROPOSED ADJUSTMENTS

Notes to Proposed Adjustments

ADJUSTMENT:

FACTS

TAX LAWS

LEGAL ISSUES

PROPOSITIONS OF LAW

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WHAT YOU MUST DO NOW

(1) If you do not intend to accept this Notice of Proposed Adjustment you must :

(1) notify the Commissioner of Inland Revenue by Notice of Response that a proposedadjustment contained in this notice is rejected; and

(2) In your Notice of Response -

(a) specify the items in the NOPA that you consider are in error; and

(b) specify the tax laws on which you are relying; and

(c) outline the facts in the Commissioner’s NOPA which are wrong; and

(d) state any further facts which may be relevant; and

(e) outline any further legal issues you wish to rely on; and

(f) state the propositions of law you are relying on.

(2) Your Notice of Response must be issued to the Commissioner at the above addresswithin a two month period starting on the date of issue of this notice . The date of issue isindicated above.

(3) If you do not within a two month period starting on the date of issue of this notice notifythe Commissioner by Notice of Response that you reject a proposed adjustment contained inthis notice you are deemed to accept the proposed adjustment and you may not challenge theadjustment in any subsequent Court proceedings.

(4) You may indicate in your Notice of Response whether you propose to treat the matter asone which may eventually be resolved by the small claims procedure. If the matter is to betreated by you as one to be dealt with under the small claims procedure then special procedureswill apply designed to shorten the pre-assessment process. You are, however, advised that anelection to use the small claims procedure will preclude you at a later stage from using thegeneral jurisdiction of the Taxation Review Authority or the High Court.

(5) Please note that the amounts referred to in this Notice of Proposed Adjustment refer toincome figures not tax figures, unless otherwise stated. If these adjustments are accepted yourultimate tax payable may need to be adjusted to include consequential adjustments to suchitems as ACC levies, Family Support Tax Credits, Use of Money Interest, and Additional Tax.

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NOTICE OF RESPONSE

TAXPAYER’S NAME:

IRD NUMBER:

DATE OF ISSUE:

ITEM IN ERROR

FACTS IN ERROR

ADDITIONAL FACTS

TAX LAWS

ADDITIONAL LEGAL ISSUES

PROPOSITIONS OF LAW

WHAT YOU MUST DO NOW

(1) If you intend to reject this Notice of Response, you must notify the Commissioner ofInland Revenue of such rejection in writing; and

(2) Your notice rejecting the Commissioner’s Notice of Response must be issued to theCommissioner at the above address within a two month period starting on the date ofissue of this notice. The date of issue is indicated above .

(3) If you fail to respond within the two month period stated above, you will be deemed tohave accepted the Commissioner’s Notice of Response.

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DISCLOSURE NOTICE

To: Tax PayerP O Box 123Wellington

IRD No: XX-XXX-XXX

Take Notice that the Commissioner of Inland Revenue hereby requires you to provide a State-ment of Position on or before xxxxxxx 199X being two months from the date of issue of thisNotice. The Commissioner has no power to accept a Statement of Position issued after thatdate. However, application may be made to the High Court for additional time to issue theStatement of Position, provided such application is made before the expiry date above.

In terms of section 89M(3) of the Tax Administration Act 1994, the Commissioner is requiredto advise you of section 138G, the evidence exclusion rule. The evidence exclusion rule has theeffect of preventing any further facts, evidence, issues or propositions of law being argued in achallenge, subject to limited judicial discretion, or unless the Commissioner and the taxpayeragree to add material to the Statement of Position.

It is accordingly in your best interest to ensure all material that you consider relevant to achallenge is included in the Statement of Position.

This request is issued pursuant to section 89M of the Tax Administration Act 1994 and relatesto your Notice of Proposed Adjustment issued on XXXXXX 199x.

If you fail to comply with the terms of this Notice within two months from the date of issue ofthis Notice you will be deemed to have accepted the Commissioner’s position as stated in theCommissioner’s Notice of Response dated xxx.

DATED at Wellington this ______ day of ________199x

__________________

for and on behalf of theCommissioner of Inland Revenue

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COMMISSIONER’S STATEMENT OF POSITION

TAXPAYER’S NAME:

IRD NUMBER:

DATE OF ISSUE:

ISSUE IN DISPUTE:

FACTS

LIST OF EVIDENCE

LEGAL ISSUES

PROPOSITIONS OF LAW

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REFERRAL TO ADJUDICATION

COVER SHEET

TAXPAYER:IRD NO:ADDRESS:TELEPHONE:

AGENT:ADDRESS:TELEPHONE:

INLAND REVENUE OFFICER:OFFICE:TELEPHONE:

ATTACHMENTS

NOTICE(s) OF PROPOSED ADJUSTMENT

NOTICE(s) OF RESPONSE

CIR REJECTION OF Notice of Response

CONFERENCE DETAILS

CIR STATEMENT OF POSITION

TAXPAYER STATEMENT OF POSITION

CIR STATEMENT OF POSITION REPLY

DOCUMENTARY EVIDENCE (As Listed)

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SCHEDULE OF ADJUSTMENTS

Disputed Proposed Adjustments

Issue Period Amount

__________________________________________ ____________ _____________

__________________________________________ ____________ _____________

Other issues - Accepted or Deemed accepted

Issue Period Amount

__________________________________________ ____________ _____________

__________________________________________ ____________ _____________

Period Extension of Date Return Due date for Expiry DateTime Bar filed payment of of time bar

tax

______ __________ __________ ___________ __________

______ __________ __________ ___________ __________

DOCUMENTARY EVIDENCE

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

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Amended legislation referencesThe former Taxpayer Compliance, Penalties and Disputes Resolution Bill consists of the following eleven Acts:

• Tax Administration Amendment Act 1996

• Taxation Review Authorities Amendment Act 1996

• Income Tax Act 1994 Amendment Act 1996

• Goods and Services Tax Amendment Act 1996

• Stamp and Cheque Duties Amendment Act 1996

• Gaming Duties Amendment Act 1996

• Estate and Gift Duties Amendment Act 1996

• Student Loan Scheme Amendment Act 1996

• Accident Rehabilitation and Compensation Insurance Amendment Act 1996 (administered by ACC)

• Child Support Amendment Act 1996

• Summary Proceedings Amendment Act 1996 (administered by the Justice Department)

Documents

IRD Tax Information Bulletin: Volume Eight, No.3 (August 1996) … · 2019. 11. 12. · 3 IRD Tax Information Bulletin: Volume Eight, No.3 (August 1996) The new disputes resolution