Amendments to disputes rules

2006 amendments clarify and correct changes to the disputes resolution rule amendments in the Taxation (Venture Capital and Miscellaneous Provisions) Act 2004.

Sections 3, 89C, 89D, 89K, 89N and 89O of the Tax Administration Act 1994

A number of minor remedial amendments have been made to the Tax Administration Act 1994 (TAA). The amendments clarify and correct changes to the disputes resolution rule amendments in the Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 (the amending Act).

Two-month response period to a notice of disputable decision

Section 3 contains a definition of "response period" within which parties to a dispute must produce the relevant document. The two-month response period for taxpayers to issue a notice of proposed adjustment (NOPA) to their self-assessment or the Commissioner's assessment was changed in the amending Act to four months. However, the response period for a taxpayer to issue a NOPA to a disputable decision that is not a notice of assessment remained at two months.

For consistency, the two-month period for a taxpayer to issue a NOPA to a notice of disputable decision has been changed to four months. A change was recommended by the Finance and Expenditure Select Committee to ensure that the move to a four-month response period is limited to situations when a NOPA is issued under the disputes resolution process. The two-month response period to initiate challenge proceedings remains.

The amendment applies from 1 April 2005, the date the new disputes rules took effect.

Commissioner may issue an assessment without first issuing a NOPA

Section 89C allows the Commissioner to issue an assessment without first issuing a NOPA in certain circumstances. Section 89C(db), introduced in the amending Act, provides for one such circumstance as being where the assessment is made in respect of facts and law which are identical to a previous assessment of the taxpayer "…for another income year…".

The amendment ensures that this exclusion applies to previous GST return periods as well as income years.

The amendment applies from the date of enactment, 3 April 2006.

Suspension of the dispute in a test case

The amending Act introduced a new section 89O to allow for the suspension of a dispute following the outcome of a test case. The suspension may be agreed in relation to a dispute between the Commissioner and a taxpayer if the Commissioner has designated a case involving another taxpayer as a test case. Any applicable time bars are put on hold until the outcome of the test case.

The period of the suspension starts from the date of the agreement and ends on the earliest of:

  • the date of the court's decision in the test case; or
  • the date on which the test case or the dispute is otherwise resolved.

A further provision describes the period of time within which the Commissioner must make the assessment. The period could require the Commissioner to issue the assessment on the date of the relevant decision. Practically, it will not be possible to issue the assessment if the period from the application to the time bar is not included in the time allowed for the suspension.

The change to section 89O clarifies that the period starting on the date of the agreement (made within the time bar) is in addition to the period within which the Commissioner must make the assessment (the four-year time bar). If the agreement to suspend the dispute is reached shortly before the application of the time bar, the amendment allows a further 60 days to issue the assessment.

The amendment applies from the date of enactment, 3 April 2006.

Application to High Court to issue an assessment without completing the disputes process

Section 89N applies in situations where the Commissioner applies to the High Court for an order to allow more time to complete the disputes process, or issue an assessment without completion of the disputes process.

The period of time is the total of the four-year time bar, and the period of time that starts on the date of the application (made within the time bar) and ends on the earliest of the date of the court's decision, the date on which the application or dispute is otherwise resolved. The period could require that the Commissioner issue the assessment on the date the relevant decision is made, rather than also allowing the time from the date of the application to the time bar to be included in the total time of the suspension.

The amendment clarifies that the period starting on the date of the application is in addition to the period within which the Commissioner must make the assessment (the four-year time bar).

The amendment applies from the date of enactment, 3 April 2006.

Request for information under a statute

Section 89N(1)(c)(vi) enables the Commissioner to issue an assessment without completing the disputes process when the disputant has failed to comply with an information request.

The provision of information is generally required by the Commissioner under the TAA. The amendment replaces all references to the word "request" with the word "require" in the provision, allowing the Commissioner to issue an assessment without completing the disputes process.

The amendment applies from the date of enactment, 3 April 2006.

Cross-reference correction

Under the previous rules, section 89D(2C) provides that if the Commissioner has made a GST assessment for a taxpayer, the taxpayer can dispute the assessment only if they provide a return for the relevant GST-return period. The new amendment now provides that the general requirement in section 16(3) of the GST Act for a return to contain a notice of assessment does not apply in this case.

The amendment applies from the date of enactment, 3 April 2006.

Drafting

Section 89K(1)(a) has been re-drafted to correct duplicating amendments made by the earlier Taxation (Venture Capital and Miscellaneous Provisions) Act 2004. The amendment applies to disputes commenced on and after 1 April 2005.