Unsuccessful appeal from the Commissioner of Inland Revenue's strike-out application
2007 case note – unsuccessful attempt by taxpayer to force CIR to accept a late objection – Russell template.
An unsuccessful attempt by the taxpayer to force The Commissioner of Inland Revenue to accept a late objection.
This was an appeal from the Commissioner's successful striking out of a Judicial Review at the High Court (reported at (2006) 22 NZTC 19,748).
This is a Russell template related matter.
The taxpayer sought to file a late objection to assessments made by the Commissioner in the 1982 to 1984 income tax years (based upon tax avoidance: see at (1998) 18 NZTC 13,537) on the basis the Commissioner had subsequently made inconsistent assessments of other taxpayers by assessing the same money to other taxpayers. This turned on an application of section 99(4) of the ITA 1976 (now section BG1(2) ITA 2004)
The Commissioner declined to accept the late objections (and thus did not allow them) on the basis he had no power to re-assess in the relevant years anyway as those years had been determined by the Courts.
The taxpayer sought judicial review but the Commissioner was successful in striking out the judicial review. The taxpayer appealed the Commissioner's success in the strike-out application.
The Court of Appeal agreed the Commissioner had no power to amend the assessments and that the strike‑out was correct. In part, they relied upon their earlier decision in Wire Supplies  NZCA 244 at par  to  of that decision.
In essence, the Court concluded that if there were inconsistent assessments that was an issue for challenges in relation to the later assessments. It did not offer the earlier and now confirmed assessments a new ground of objection.
The Court also agreed that the Commissioner cannot re-open an assessment once the objection is in the hands of the Taxation Review Authority. The Court observed that:
"... The Commissioner refused to allow the appellant's proposed late objection because the Commissioner's inability to reopen the Track A assessments on the grounds of inconsistency with the Track C assessment made the objection futile."
"We are satisfied that the Commissioner was not in error in the way he exercised his discretion not to accept the late objection. The application to review the Commissioner's discretion on this ground cannot succeed, and it was appropriate to strike it out." [par 26-27]
As to the other ground of judicial review, the Court of Appeal considered that, because of the conclusion above, this was strictly unnecessary to deal with but addressed it anyway. It was concluded that there was on the facts of this case "no unfairness in not allowing the present proceedings to proceed further" [par 33]
Income Tax Act 1976