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11 May 2009
Appeal Status
Not appealed

Relitigated decision of the Authority

2009 case note – Identical matters subject to previous proceedings and decided upon cannot be relitigated - abuse of the Court's process, PAYE matter.

TRA No 029/07 Decision 10/2009


The disputant attempted to relitigate matters already decided by the Authority. The disputant's argument was that he was remunerated inclusive of PAYE. A previous decision of the Authority found the disputant's remuneration excluded PAYE. In this proceeding the Commissioner sought to strike out the disputant's claim on the basis that this matter had already been before the Authority and decided upon by it.

Impact of decision

The decision confirms that identical matters that have been subject to previous proceedings and decided upon cannot be relitigated.


In these proceedings the disputant attempted to relitigate a previous decision of the Authority (Case X16 (2005) 22 NZTC 12,216) relating to PAYE amounts assessed to the disputant under section NC16 of the Income Tax Act 1994.

The Commissioner applied for a strike out on the basis that the disputant's challenge is an ill-conceived attempt to relitigate matters which have been the subject of previous proceedings, and it is therefore an abuse of the Court's process.

The background to Case X16 is as follows:

  • The disputant was a Chief Executive Officer of a telecommunications group of companies in June 2000, the disputant preferred to operate as an independent contractor rather than an employee, however he had initially left his options open as to his employment status and no PAYE was deducted from his remuneration. This situation continued for the June to 31 October 2000 period. Accounts staff at the company the disputant worked for were made redundant due to the insolvency of the company, the disputant was made responsible for PAYE matters.

In Case X16 the Authority held:

  • No PAYE deductions were made by the employer in relation to salary payments made by the employer to the disputant. The disputant knew this and did nothing about the situation until the receiver of the company had been appointed and the disputant's employment contract was terminated.

    The disputant was responsible for non-deduction and non-payment of PAYE. He received his salary as gross income. Accordingly, it was appropriate that he be assessed for the PAYE content of his remuneration.

The Authority confirmed the Commissioner's assessments, and made adjustments amounting to $28,199.84. Following the Authority's decision, the Commissioner issued a $1,891.98 default assessment to the disputant which related to the period ending 30 June 2000. The disputant is disputing this assessment in this present proceeding.


The Authority held that PAYE was not deducted from payments made to the disputant by his employer company. Therefore, the disputant was personally liable for the PAYE under section NC16 of the Act.

The disputant's employer failed to make any PAYE deduction. That aspect was simply not attended to, and the disputant knew that, and that the employer did not have funds available for PAYE on the disputant's salary. Also, there is considerable vagueness as to whether the disputant's salary payments were intended to be on an employment basis or independent contractor basis, and whether or not they were meant to be net of tax.

The Authority had already made similar findings against the disputant in relation to the PAYE periods ended 31 July 2000 to 31 October 2000. As reported in Case X16, similar findings were also made in relation to the June 2000 period.

At the strike-out hearing, the Authority allowed the disputant to file further evidence in support of his position that PAYE was deducted from payments made to him by his employer company. The Authority went on to say that filing further evidence would not, and could not, lead to the reopening of the other periods (31 July 2000 to 31 October 2000) and that the disputant could only rely on further evidence for the period ending 20 June 2000.

New evidence did not disclose any new matters which would make a material difference to the Authority's previous decision in Case X16.

The Commissioner's position is that PAYE has never been paid by the disputant's employer and section NC16 applies and makes the disputant, liable to the Commissioner for PAYE. The Authority agreed with the Commissioner and found that the disputant's challenge is an ill-conceived attempt to relitigate matters which have been the subject of previous proceedings, and is therefore an abuse of the Court's process.

Income Tax Act 1994