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16 Aug 2017
Appeal Status
Not appealed

Taxation Review Authority declines company’s application to hear late claim

2017 case note - taxpayer's application to make a late claim TRA dismissed – exceptional circumstances, late filing of claim, late challenge.

TRA 001/17 [2017] NZTRA 06


A taxpayer’s application to make a late claim in the Taxation Review Authority (“the Authority”) was dismissed as no exceptional circumstances applied to its situation.


This case follows the stages of identification, evaluation and discretion as set out by the Court of Appeal in Commissioner of Inland Revenue v Fuji Xerox NZ Limited (2002) 20 NZTC 17,470 (“Fuji-Xerox”) when considering s 138D of the Tax Administration Act 1994 (“TAA”). The case is a reminder of the procedural steps required to file a challenge and the limited ability to extend the time for filing a challenge.


The disputant filed a notice of claim with the Authority, 10 working days after the last day of the two month response period. The Commissioner of Inland Revenue (“the Commissioner”) did not file an opposition and agreed to abide the decision of the Authority.

The Authority issued a minute setting out s 138D of the TAA and directed the director of the disputant to file an affidavit addressing the event or circumstance beyond its control which provided a reasonable justification for not commencing its challenge within the requisite period.

The director filed an affidavit, however this dealt with events after the response period had ended.

The Authority was not satisfied and directed a further affidavit be filed and for the disputant to file any submissions if it wished. The Authority also extended an opportunity to the disputant for a hearing before her. Finally, the Authority recommended the disputant obtain legal advice (and noted that the case manager had done so twice previously).

The disputant filed a further affidavit but did not wish to file submissions or have a hearing. The application was therefore considered on the papers.


The Authority set out the three stages a hearing authority should consider as described by the Court of Appeal in Fuji-Xerox. The stages identified by the Court were identification, evaluation and discretion.

First, the hearing authority must identify the events or circumstances relied on by the disputant. Only circumstances beyond the control of the disputant can be relied on. Acts or omissions of agents are not exceptional circumstances unless it was caused by an event or circumstance beyond the control of the agent which could not have been anticipated and the effect of which could not have been avoided by compliance with accepted standards of business organisation and professional conduct.

Having identified the circumstances outside s 138D of the TAA, the hearing authority needs to evaluate whether they have provided reasonable justification for the disputant not having commenced the challenge within the response period.

The final step is the hearing authority deciding whether to exercise its residual discretion to grant leave to bring a late challenge.

The Authority then examined the circumstances relied upon by the taxpayer. In the first affidavit, the director alleged the disputant’s notice of claim was unique in the sense that it involved a large number of documents which needed to be attached to the claim as “evidential data”.

The second affidavit stated the disputant had received its invoices back from the Commissioner around the first week of April 2017. The returned documents were photocopies which were said to be illegible. He then embarked on the “insurmountable task of making extra copies of the tax invoices when the Commissioner already had most copies which were bar coded and encrypted.” The disputant provided boxes containing copies of the invoices along with its claim.

The Authority noted that in the notice of claim, the disputant challenged the decision of the Commissioner not to allow input deductions across a number of GST periods. One of the issues arising from the adjudication report and mentioned in the notice of claim was the alleged failure of the disputant to provide valid tax invoices to the Commissioner.

The Authority commented that this is an unfortunate situation but it was unclear why the director felt it necessary to file copies of the invoices along with the notice of claim as this is not a requirement under the Regulations (Regulation 8, Taxation Review Authorities Regulations 1998).

The Authority observed that the Commissioner had provided written advice to the disputant as to the steps required to file a challenge and the disputant was clearly on notice as to the time period and filing requirements and this was admitted in the director’s first affidavit.

The Authority, having found the events were clearly not beyond the disputant’s control and did not amount to exceptional circumstances under s 138D of the TAA, declined the application. The taxpayer will therefore be unable to challenge the Commissioner’s assessments before a hearing authority.

Section 138D Tax Administration Act 1994