How did it get so late so soon? TRA Cases 2/2018 and 4/2018

An adjustment to a taxpayer’s tax liability can be proposed by the taxpayer, or by the Commissioner. Regardless of who says ‘go,’ however, once the disputes process is initiated, there are tight time frames and statutory deadlines to be met. Further, failing to meet these deadlines can result in an adjustment being automatically deemed accepted or a challenge being struck out entirely. All too quickly, a taxpayer can find themselves repeating a sentiment well expressed by Dr Seuss, ‘How did it get so late so soon?’

The following three cases are summarised to illustrate the traps and pitfalls inherent in approaching the disputes process without proper guidance and understanding.

Case 12/2016

Too often taxpayers are caught out by non-compliance, not only with tax obligations, but also with the detailed statutory disputes process. In Case 12/2016, the Commissioner sought to strike out the proceedings brought by the taxpayer. If a case is struck out the judge removes the challenge from the court entirely. These proceedings challenged the Commissioner’s decision to refuse to accept the taxpayer’s Notice of Proposed Adjustment (“NOPA”) which sought a GST refund. A NOPA is filed to change a return or disagree with an assessment or disputable decision. There are different time limits for filing a NOPA depending on what the taxpayer is responding to or amending.

In this case, the taxpayer did not file a NOPA until four years after the initial decision not to pay the GST refund to the taxpayer. The taxpayer failed to show a reasonable intention to continue the disputes process, or exceptional circumstances preventing them from filing the NOPA in time. As a result, the claim was struck out, and the GST refund sought was not available to the taxpayer.

Case 2/2018

This case also stemmed from a GST claim. The Commissioner reassessed a 2008 GST return period in 2011, changing the refund due from $144,706.72 to $0. The Commissioner asserted that the taxpayer was involved in fraudulent activity. The taxpayer wished to dispute the Commissioner’s finding, and duly filed a NOPA in response to the assessment, alongside a notice of claim in the Taxation Review Authority (“TRA”). The Commissioner replied with a notice of response (“NOR”), which was rejected in writing by the taxpayer.

At this stage, the Commissioner asked if the taxpayer wished to continue with the challenge proceedings in the TRA. Despite responding that he did intend to pursue this challenge, he requested that the disputes process be suspended until further notice. Two years later, in 2013, having presumably collected his thoughts, the taxpayer filed to discontinue the TRA proceedings that were still on hold, and wrote to the Commissioner requesting that the dispute process be progressed. However, by discontinuing the TRA proceedings, the taxpayer had inadvertently accepted the Commissioner’s assessment by default.

In 2015, the taxpayer again wrote to the Commissioner requesting that the GST refund at issue be paid. A response in 2016 stated that no such refund would be paid. Finally, in the recent 2018 hearing, the TRA heard the taxpayer’s claim which tried to continue disputing the allegations of fraud and demand the GST refund be paid. Unfortunately, the TRA found that the discontinuance in 2013 resulted in a time bar, and the taxpayer had no further recourse to challenge the Commissioner’s assessment. As a result, the Commissioner’s reassessment stood.

Case 4/2018

The Commissioner applied to have the taxpayer’s notice of claim struck out, claiming that the taxpayer was out of time to file it. At the time of writing, according to the Tax Administration Act 1994 (“TAA”) s138B(4)(c), a taxpayer has two months to file a proceeding in the TRA after receiving a notice of assessment they wish to dispute. In this case, the taxpayer was uncertain as to when he was expected to file his response to the Commissioner’s assessment. The taxpayer’s accountant incorrectly believed this two-month window started from the issue of a computer-generated notice of assessment on 10 July 2017. It wasn’t until the taxpayer’s lawyer chased him to ask how the taxpayer and accountant were progressing the proceedings that the taxpayer was informed that the correct date was the 24 April 2017. This was two months after the date when the Inland Revenue’s investigator sent an earlier notice of assessment to the taxpayer.

Regrettably, the taxpayer’s accountant had left on holiday until early July and the taxpayer was not sure what documents to file. He suggested that, even if he visited his accountant’s office and dug through the files, he would still have been unsure which documents were intended to be part of the notice of claim. Notwithstanding this, the taxpayer gave it a go. As a result, the correct notice of claim was not filed by the accountant until the 18 September 2018, amending the incomplete version the taxpayer hurriedly filed on the 21 June 2017.

Unfortunately, both the first notice of claim and the amended notice of claim were struck out. The first notice of claim was filed incorrectly, as the taxpayer did not file three physical copies of the notice of claim containing the documents with the TRA together with payment of the filing fee as required – instead the taxpayer first sent the notice of claim by email. As a result, the claim was incorrectly filed, and so not recognised by the TRA. Because no earlier claim was recognised by the TRA, no amendment by way of filing the updated statement of claim was possible. As a result, the Commissioner’s assessment was likely deemed accepted by the taxpayer despite his efforts to challenge.


Cases that end up bogged down in technical TAA rules which govern issues such as the timing of the disputes process, the acceptable format of responses and the appropriate method for filing a complaint, are too common. This is probably because the TAA does not make for good light reading after supper. You may end up with dreams of red tape and bureaucracies like the Vogon’s that Douglas Adams bemoaned in his famous Hitchikers Guide to the Galaxy:

“They are one of the most unpleasant races in the galaxy - not actually evil, but bad tempered, bureaucratic, officious and callous. They wouldn't even lift a finger to save their own grandmothers from the Ravenous Bugblatter Beast of Traal without an order, signed in triplicate, sent in, sent back, queried, lost, found, subjected to public enquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.”

It is far too easy to file out of time, or file incorrectly, and suddenly find a legitimate claim simply cannot be heard.

If you wish to challenge an assessment, amend a return or dispute a decision and are concerned about your duty to file on time, in the correct manner and with the required information, you can contact me using our contact page or call my Chambers on (09) 307 3993.

© G D Clews, 2018



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