Acceptance of late objections under Section 92(2) of the Child Support Act 1991
SPS 10/03 sets out IR's policy on the acceptance of late objections to assessments or decisions under the Child Support Act 1991.
- This Standard Practice Statement sets out Inland Revenue's policy on the acceptance of late objections to assessments or decisions under section 92(2) of the Child Support Act 1991 ("the CSA").
- This matter was previously included in SPS INV-300: Acceptance of late objections under section 126 of the Tax Administration Act 1994, published in March 1997. SPS INV-300 has been withdrawn (refer to notice of withdrawal in Tax Information Bulletin Vol 21, No 3 (May 2009)).
- For the purposes of this statement "objector" means "liable person" and or "custodian" under the CSA.
- Section 92(1) of the CSA provides that objections are to be delivered or posted to the Commissioner within 28 days after the date on which notice of the decision or assessment objected to was given by the Commissioner. However, section 92(2) of the CSA provides a discretion to allow the Commissioner to accept a late objection.
- The Court of Appeal in CIR v Wilson (1996) 17 NZTC 12,512 considered it impossible to lay down absolute rules as to what factors will always be relevant to the determination of a late objection request. The Court however in effect, did suggest a two step approach in considering requests. In summary, the first step is to consider the objector's explanation for the lateness of the objection. A reasonable explanation is all that is required at this stage. The second step is to consider all the surrounding circumstances and decide whether, as a matter of fairness, the application should be allowed.
- The steps are:
Consider the explanation given by the objector for their failure to make a timely objection.Where there has been a delay, the reasons for the failure to make the objection within the required time will be considered.
Depending on the circumstances, it may be relevant to consider whether the failure to object in time was due to inadvertence, negligence, an agent's action or a deliberate decision of the objector. These factors may weigh against the objector.
A reasonable explanation to explain the delay is all that is required at this point. For example, where the delay was caused by:
- the ill health of the objector, or
- other circumstances beyond their control, such as the objector being overseas during the whole of the 28 day objection period and there were no arrangements in place to receive and deal with notices.
This will generally be sufficient to satisfy step 1.
If there is some merit in the explanation given (that is, it provides reasonable justification for the failure to object in time), the objection will be considered further in accordance with step 2.
If, however, the explanation is inadequate, the objection can be rejected making it unnecessary to proceed to step 2.
Under section 92(3) of the CSA, the details and grounds of the late objection must be given at the same time as the explanation for the delay.
The Commissioner will consider all the circumstances surrounding the objection to decide whether, as a matter of fairness, the objection should be allowed.
This may mean some duplication of those matters considered in step 1 (reasons for the delay in making the late objection). However, the purpose at step 2 is to determine whether in the light of all the circumstances, and as a matter of fairness the objection should be allowed.
The Court of Appeal in Wilson noted that although obtaining a correct assessment may be an important factor, it would be going too far to say it is the paramount consideration in deciding whether to accept a late objection. A number of factors have been identified as potentially relevant in this regard. These are set out in Appendix A.
Claims where there has been a clear error
Where there is a clear error in the assessment or decision, an amendment may be made under section 87 of the CSA.
If the error can be established only after further investigation or consideration, (and the error does not arise from a subsequent change in interpretation of the law), the procedures set out in steps 1 and 2 will need to be followed. A liberal approach should be taken when considering such claims.
Weighting of factors
- The weighting to be given to the factors which are taken into account in deciding whether or not to accept a late objection, is to be decided by the Commissioner on the circumstances of each case.
Recording the decision
- It is important that the factors taken into account in deciding whether or not to accept a late objection be adequately documented.
- A detailed report will be prepared, addressed to the person who will be making the decision whether to accept the late objection, or not. This report will set out the factors which have been taken into account, the weight that has been applied to each factor and the reasons for the recommendation.
- The person making the decision is to include their comments including their reasoning and the resulting decision.
No appeal or objection rights
- There are no appeal or objection rights under the CSA where the Commissioner does not exercise his discretion to accept a late objection. However, the decision can be challenged by way of judicial review to the High Court.
- Should judicial review proceedings arise, evidence of the decision making process will need to be produced to the Court. It will enhance the evidence which can be produced to the Court, if the factors taken into account and the reasons for making the decision are recorded at the time. This evidence may include an affidavit from the officer who made the decision to decline the late objection, all relevant correspondence, file notes, phone call notes, signed reports and system notes.
This Standard Practice Statement is signed on the 15th day of July 2010.
LTS Manager, LTS Technical Standards
Factors which may be relevant in considering a late objection request (to be considered under "step 2" of the process)
Some factors which support the acceptance of a late objection are:
- If the proposed objection has apparent merit. This may and often will be a relevant factor. This can only be assessed on the material before the Commissioner when asked to accept a late objection and need not be investigated to the point of allowance or disallowance. It will not usually be necessary for Inland Revenue to make further enquiry to determine the merits in order to make a decision. In some cases however, a moment's check may show that the quantification of liability in the assessment was erroneous.
- If the objector had consistently asserted their entitlement and only failed to lodge an objection due to the Commissioner's insistence that the entitlement was not available to them.
- If there are no practical or administrative difficulties in considering the situation at that time (e.g. they are part of a readily identifiable group, the evidence is immediately available and no practical obstacles exist to its application).
- The objectors have been told that a "test case" would apply to them.
- When an assessment notice or decision has been sent to the objector's home and the objector is temporarily away during the 28 day objection period.
- The serious ill health or death of an agent, or the agent's office is shut for annual holidays.
- When granting the relief requested would not violate the Commissioner's responsibility to be even handed.
- When the objector is seeking legal or other professional advice.
- When the objector is ignorant of procedures to follow.
- When the objector has fallen ill.
Some factors which support declining a late objection are:
- If an objector has a professional adviser, Inland Revenue may be reluctant to accept a late objection as a professional advisor should generally be aware of the legislative requirements of the CSA. Omitting to lodge an objection because of an oversight by the objector or their advisor will usually not on its own constitute satisfactory grounds for accepting a late objection.
- The extent to which an objection is late and any history of making late objections by either the objector or the agent.
- The Commissioner would not be required to exercise discretion where the objector had never contemplated seeking a benefit but had endeavoured to take advantage of a subsequent change in the interpretation of the law, such as by way of a subsequent court decision or issue of a Standard Practice Statement.
All circumstances are to be considered. The above factors are guidelines only and are not exhaustive. They are not intended to restrict the discretion given to the Commissioner. Decision makers should always remain open to the possibility of new factors arising in any case that may make it unfair not to accept the objection.