CIR v ROBERTS [2019] NZCA 654

CIR v ROBERTS [2019] NZCA 654 [17 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA560/2018[2019] NZCA 654BETWEEN COMMISSIONER OF INLANDREVENUEAppellantAND NANCY LOIS ROBERTSRespondentHearing: 29 October 2019Court: Clifford, Goddard and Stevens JJCounsel: A B Goosen and C M Kern for AppellantJ H Coleman for RespondentJudgment: 17 December 2019 at 3.30 pmJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the respondent costs for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Stevens J)Introduction[1] The question in this appeal is whether forgiveness of a debt owed to the donorby a charity qualifies as a "charitable or other public benefit gift" under s LD 1 ofthe Income Tax Act 2007 (the ITA 2007) with the consequence that the donor isentitled to a tax credit under the section.[2] The answer depends on the meaning of "charitable or other public benefit gift"in s LD 3 of the ITA 2007 as defined at the relevant times. In dispute are the 2011 to2015 tax years, during which period the respondent, Mrs Roberts, made annual giftsto a charitable trust by mean of deeds of gift.[3] The wording in s LD 3(1)(a) of the ITA Act 2007 was amended for the 2014and 2015 years with the result that we are required to interpret the meaning of thefollowing words:(a) "a gift of $5 or more that is paid" (for the 2011 to 2013 years); and(b) "a monetary gift of $5 or more that is paid" (for the 2014 and2015 years).1Factual background[4] The facts behind this disputed question of interpretation are not in issue.Mrs Roberts and her late husband had in 2007 established the Oasis Charitable Trust(the Trust) which was registered with the Charities Commission. Mr and Mrs Robertslent $1,708,080.90 to the Trust in October 2008.[5] Mrs Roberts stated in her affidavit evidence in the High Court that she laterforgave some of the debt due to her in the 2011 to 2015 income years as follows:Date Amount30 March 2011 $38,40030 March 2012 $45,27028 March 2013 $65,27228 March 2014 $60,41831 March 2015 $65,372Total $274,732[6] By way of example, the forgiveness of debt for the tax year ended31 March 2011 was implemented by Mrs Roberts executing a deed of gift, which1 Section LD 3 was subsequently retrospectively amended on 18 March 2019 with effect from1 April 2008, but the amendment does not apply to this case.provided that "the Donor [does hereby] freely give and release unto the Donee the sumof [$38,400 and does reduce] the liability of the Donee to the sum of [$820,064.50] asfrom the date hereof". Subsequently, Mrs Roberts filed a charitable tax credit claimform in respect to the $38,400 gift to the Trust claiming a tax credit of $12,799.98.[7] Mrs Roberts stated in her evidence that the total tax credits for the amountsforgiven were claimed by her for the relevant income years as follows:Income year ended Amount31 March 2011 $12,799.9831 March 2012 $15,089.9931 March 2013 $21,757.3131 March 2014 $20,139.3131 March 2015 $21,791.65Total $91,577.24[8] Mr Roberts died in September 2011 and Mrs Roberts received payment fromthe Commissioner of Inland Revenue (the Commissioner) of the donations tax creditsfor the forgiveness of debt (as well as for some other cash donations which are not inissue) in each of the five years by direct credit to her bank account.[9] Following an investigation, the Commissioner issued a notice on 4 May 2016requiring repayment by Mrs Roberts of the previously paid tax credits relating to theforgiveness of debt. This amounted to a disputable decision that is not an assessmentunder s 3(1) of the Tax Administration Act 1994 (the TAA). This resulted in a disputesprocess under Part 4A of the TAA. Following completion of the disputes process,the Commissioner's Disputes Review Unit confirmed the Commissioner's disputabledecision. Mrs Roberts successfully challenged that ruling in the High Court.2High Court judgment[10] In the High Court it was common ground between the parties that "monetary"is not a defined term for the purposes of s LD 3.3 Counsel also accepted that "money"2 Roberts v Commissioner of Inland Revenue [2018] NZHC 2153 at [76].3 At [16]. "Money" is defined in s YA 1, but this definition is not applicable for the purposes ofs LD 3.is an imprecise term, the meaning of which depends on the context in which it is used.4Counsel disagreed, however, on whether "monetary" was simply synonymous with"money" in a narrow sense (e.g. cash or the like, such as payments by cheque,electronic funds transfer, credit card or debit card), or whether it had a wider meaning.5[11] After considering the legislative history, Parliament's purpose and the statutorycontext, Cull J preferred the submission on behalf of Mrs Roberts that "monetary" isa broader concept than "money" in the form of cash.6 The Judge's reasoning isconveniently summarised thus:[43] There is no discernible difference between the kind of debt and creditrelationship that occurs when dealing with a bank account, whether by internetbanking or by cheque, and the similar kind of debt and credit relationshipbetween a debtor and creditor. In both cases, the content of the gift isdenominated in terms of money. The value of the gift is the monetary figurethat is credited to the recipient. No complicated valuation issues arise in thetypical case. It is for this reason that I prefer the meaning of "monetary"advanced by Mr Coleman, namely, that "monetary" has a broader meaningthan "money" in the form of cash.[44] To the extent there might be difficult questions to answer in caseswhere the charitable organisation has become insolvent, those are best left tobe dealt with on the facts of a suitable case, if and when one arises.Certainly, this issue is not sufficiently concerning, to detract from theconclusion I have otherwise reached on the appropriate meaning of"monetary".[12] The Judge held there was no question that the forgiveness of debt to the Trustmet the definition of gift and that the gifts were for an amount of more than $5 in eachyear.7 Moreover, the recipient of the gifts was a charitable trust as required by s LD 3.8Given those findings, the only question was whether the gifts, in the form offorgiveness of debts, were monetary gifts.9 On this point, the Judge concluded:[74] I have reached the view that a monetary gift of "$5 or more" does notrequire a cash payment. Consistent with the policy approach to the legislativeamendment, it must be a gift that is sum specific, not a chattel or property itemof uncertain value. It must pertain to money, which includes not only actualcash, but a credit of a specified amount, such as a forgiveness of debt. I also4 At [16]; relying on the dictum of Tipping J in Commissioner of Inland Revenue v Thomas Cook(NZ) Ltd [2003] 2 NZLR 296 (CA) at [62].5 Roberts v Commissioner of Inland Revenue, above n 2, at [19].6 At [40].7 At [72].8 At [72].9 At [73].accept that payment can be effected by the crediting and debiting of accountsthat is involved in giving effect to a reduction of debt.[13] On that basis, the Judge upheld Mrs Roberts' challenge and directedthe Commissioner to alter the disputable decision to conform with the decision ofthe High Court upholding the tax credits.10[14] Before us, Mr Coleman for Mrs Roberts, in general terms supportedthe Judge's reasoning. In his oral submissions he addressed a small number ofthe submissions made on behalf of the Commissioner. These submissions are reflectedlater in this judgment.Submissions on behalf of the Commissioner[15] For the Commissioner, Mr Goosen submitted that the High Court erred inholding that a forgiveness of debt is a charitable or other public benefit gift unders LD 3(1)(a). While a forgiveness of debt can undoubtedly be a gift at common law,it is not a gift that qualifies as a charitable or other public benefit gift under s LD 1.[16] Mr Goosen submitted such a conclusion followed for two main reasons.First, on a proper interpretation, s LD 1 read with s LD 3(1) requires the gift to be agift of money in the form of cash, or the like. A release of an obligation to repaymoney is not a gift of money. Mr Goosen cited Mills v Dowdall, a decision ofthis Court said to be authority for the proposition that a forgiveness of a debt does notresult in the acquisition of any property by the person forgiven.11 Where there is aforgiveness of a debt, the gift is the extinguishment of a liability to repay money.[17] Second, there are compelling extrinsic interpretative aids that show it wasParliament's purpose that the gift must involve a transfer of money from the donor tothe donee, and a forgiveness of a debt was not intended to qualify. The purpose ofParliament's policy was a desire to avoid:10 At [76]–[77].11 Mills v Dowdall [1983] NZLR 154 (CA) at 156 per Cooke J.(a) the difficulty of valuing non-cash donations, which could result in taxavoidance; and(b) significant compliance and administrative costs.12[18] He submitted these difficulties would arise in relation to forgiveness of debt.For example, if a debt is owed to a taxpayer by an insolvent charity, that debt is worthless than its face value to the taxpayer: forgiveness of that debt does not costthe taxpayer the face value of the forgiven debt, so should not attract a tax rebate basedon its face value.[19] Ms Kern submitted that initially gifts of "money" meant gifts of cash.The subsequent legislative history of ss LD 1 and LD 3, comprising three governmentdiscussion documents demonstrated, she submitted, that Parliament did not intendthere to be a change when the word "money" was omitted from s LD 3(1)(a). Thus, thephrase "a gift of $5 or more" was intended by Parliament to have the same meaningas a gift "of money of $5 or more" (in s KC 5 of the Income Tax Act 2004(the ITA 2004)), that is, cash or the like.[20] Moreover, when the phrase "a gift of $5 or more" was replaced from27 February 2014 with the phrase "a monetary gift of $5 or more", Parliament did notintend any change of meaning. Thus, at all times the statutory intention was thatthe gift must be a gift of money which Ms Kern submitted meant "cash transfers ofmoney from a donor to a donee".The statutory scheme[21] Section LD 1 of the ITA 2007 allows a person who makes a "charitable or otherpublic benefit gift" to have a tax credit in the tax year in which the gift is made.13At all relevant times s LD 1 stated:12 Citing Michael Cullen and Peter Dunne Tax incentives for giving to charities and other non-profitorganisations: a government discussion document (Policy Advice Division of the Inland RevenueDepartment, October 2006).13 Section LD 1 is subject to some specified exclusions in s LD 2, but none apply in this case.LD 1 Tax credits for charitable or other public benefit giftsAmount of credit(1) A person who makes a charitable or other public benefit gift in a taxyear and who meets the requirements of section 41A ofthe Tax Administration Act 1994 has a tax credit for the tax year equalto the amount calculated using the formula in subsection (2).Formula(2) The formula referred to in subsection (1) is—total gifts x 33⅓%.Definition of item in formula(3) In the formula, total gifts means the total amount of all charitable orother public benefit gifts made by the person in the tax year.Administrative requirements(4) Despite subsection (1), the requirements of section 41A are modifiedif a tax agent applies for a refund under that section on behalf of aperson, and—(a) the tax agent sees the receipt for the person's charitable orother public benefit gift; and(b) the person retains the receipt for 4 tax years after the tax yearto which the claim relates.Refundable credits(5) A credit under this section is a refundable tax credit undersection LA 7 (Remaining refundable credits: tax credits under socialpolicy schemes) and is excluded from the application of sections LA 2to LA 6 (which relate to a person's income tax liability).[22] The relevant part of the definition of "charitable or other public benefit gift" isset out in s LD 3(1)(a). As noted the section was amended, as from 27 February 2014,by substituting "monetary gift" for "gift". Prior to its amendment, and applicable tothe 2011 to 2013 tax years, s LD 3(1)(a) stated:LD 3 Meaning of charitable or other public benefit giftMeaning(1) For the purposes of this subpart, a charitable or other public benefitgift—(a) means a gift of $5 or more that is paid to a society, institution,association, organisation, trust, or fund, described insubsection (2) or listed in schedule 32 (Recipients ofcharitable or other public benefit gifts): [23] In respect of donations made in the 2014 and 2015 income years, s LD 3(1)(a)stated:LD 3 Meaning of charitable or other public benefit giftMeaning(1) For the purposes of this subpart, a charitable or other public benefitgift—(a) means a monetary gift of $5 or more that is paid to a society,institution, association, organisation, trust, or fund, describedin subsection (2) or listed in schedule 32 (Recipients ofcharitable or other public benefit gifts): Our analysis[24] As the issue in this case involves a question of statutory interpretation,we apply s 5(1) of the Interpretation Act 1999 which says the text of the statutoryprovision and its purpose will determine the correct interpretation. However, asthe Supreme Court has said, even if the meaning of the text may appear plain inisolation of purpose, it is necessary to cross-check that meaning against its purpose toobserve the dual requirements of s 5.14 When considering purpose, in addition tolegislative context, the social, commercial or other objectives of the enactment maybe relevant.15 Where the meaning of the provision is not clear, context and purposewill become essential guides to meaning.16The words used[25] Section LD 3(1)(a) uses the words "a gift of $5 or more that is paid"(for the 2011 to 2013 years), and, "a monetary gift of $5 or more that is paid"(for the 2014 and 2015 years). The words "gift" and "monetary" are not defined inthe ITA 2007 for s LD 3. There is a broad definition of the word "money" in s YA 1,14 Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767at [22].15 At [22].16 At [24].but the parties agree it does not apply to s LD 3.17 The first step therefore is to considerthe ordinary meaning of the words "monetary" and "money".[26] First, we will deal with the meaning of the word "pay" because s LD 3 requiresa gift to be "paid". The word "paid" is not defined in the ITA 2007, but the word "pay"is defined in s YA 1, subject to the usual proviso that the definition applies"unless the context requires otherwise". Under s 32 of the Interpretation Act,a different grammatical form of a word that is defined in an enactment hasa corresponding meaning in the same enactment.[27] The word "pay" is defined in s YA 1 of the ITA 2007 as follows:pay,—(a) for an amount and a person, includes—(i) to distribute the amount to them:(ii) to credit them for the amount:(iii) to deal with the amount in their interest or on their behalf, insome other way:[28] The word "amount" (used in the definition of "pay") is also defined in s YA 1of the ITA 2007 and "includes an amount in money's worth". The term"money's worth" is not defined in the ITA 2007. At common law it generally has anarrow meaning for income tax purposes:18[Money's worth] had generally been defined [by the courts in the context ofincome tax legislation] to mean that which is convertible into cash so as tohave a monetary equivalent [29] Mr Goosen accepted that if the forgiveness of a loan was money's worth, thenit is possible to interpret a forgiveness of debt as having been paid because, whenMrs Roberts executed the deeds of gift, the Trust was credited with the amount of17 The definition of money in s YA 1 of the ITA 2007 includes "the right to money including thedeferral or cancellation of some or all of an obligation to pay money". This definition applies onlyto s GB 48 of the financial arrangements rules.18 Susan Glazebrook and others The New Zealand Accrual Regime — a practical guide (2nd ed,CCH New Zealand Ltd, Auckland, 1999) at 25–26.the debt that was forgiven. However, he submitted the definition only applies if thecontext does not require otherwise. Thus, he accepted that whether the definition ofthe word "paid" in s YA 1 applies to s LD 3 turns on whether Parliament intended aforgiveness of debt to qualify as a gift under s LD 3."Monetary" and "money"[30] Therefore the key words for present purposes are "monetary" and "money".Counsel cited various dictionary definitions of both words. We start with "monetary".[31] "Monetary" is defined in the Concise Oxford English Dictionary as:19Monetary adj. relating to money or currency.Black's Law Dictionary defines "monetary" as:201. Of, relating to, or involving money 2. Financial [32] We consider that, for the purposes of s LD 3(1)(a), monetary is intended tocarry the meaning "of or pertaining to money". We agree with Mr Coleman thatthe reason Parliament inserted the qualifier "monetary" into the section for the 2014year onwards, was to exclude a gift of, say, land or chattels (such as a car) or services.[33] The word "money" is defined in Black's Law Dictionary as follows:211. The medium of exchange authorized or adopted by a government as partof its currency; 2. Assets that can be easily converted to cash 3. Capitalthat is invested or traded as a commodity 4. Funds; sums of money [34] "Money" is defined in the Concise Oxford English Dictionary as:22money n. a medium of exchange in the form of coins and banknotes. wealth or financial gain.19 Angus Stevenson and Maurice Waite (eds) Concise Oxford English Dictionary (12th ed, OxfordUniversity Press, Oxford, 2011) at 923.20 Bryan A Garner (ed) Black's Law Dictionary (11th ed, Thomson Reuters, St Paul, 2019) at 1204.21 At 1204.22 Stevenson and Waite, above n 19, at 923.[35] The Oxford English Dictionary defines "money" as:231. Any generally accepted medium of exchange which enables a society totrade goods without the need for barter; any object or tokens regarded as astore of value and used as a medium of exchange.a. Coins and banknotes collectively as a medium of exchange. Later alsomore widely: any written, printed, or electronic record of ownership of thevalues represented by coins and notes which is generally accepted asequivalent to or exchangeable for these.b. Any other objects or materials which serve the same purpose as coins orbanknotes.2.a. Means of payment considered as representing value or purchasing power;the power of purchase or means of exchange represented by coins, banknotes,cheques, etc. Hence: property, possessions, resources, etc., viewed as havingexchangeable value or a value expressible in terms of monetary units; liquidassets, funds.[36] The word "money" is defined in Laws of New Zealand as follows:24[A] The term "money" generally includes banknotes as well as coins.However, the amount of money that can be paid in the various smalldenomination bank notes and in coins is limited. [B] The term money issometimes used to include not only actual cash but also a right to receive cash,such as sums standing to the credit of a bank account, or invested in securities.[C] The term may also be used in a popular sense to include all personal oreven, exceptionally, all real and personal property. If the term "money" isused in relation to paying money into Court it is to be construed in its ordinaryand natural meaning, as including money in foreign currency.[37] Like Cull J in the High Court, we are attracted to the wider definition set outat [B] in this context. We are satisfied that the words "monetary" and "money" ins LD 3(1)(a) mean more than just cash. Such a conclusion is consistent withthe Commissioner's long-standing practice of accepting that gifts made by way ofelectronic bank transfers, credit card payments or cheques qualify as monetary giftsunder this provision.2523 The Oxford English Dictionary (eBook ed, 2016).24 Laws of New Zealand Money (online ed) at [3] (footnotes omitted). The letters have been addedfor ease of reference.25 As confirmed in the Commissioner's Statement of Position dated 16 December 2016 at [78].[38] We consider the definition at [A] is too narrow. Such definition is also inaptfor the statutory context more generally because it is inconsistent with the definitionof "paid" and "pay" discussed earlier. Parliament clearly intended that payment couldbe achieved by debiting and crediting accounts, thus excluding a meaning of justbank notes or coins. It was common ground that the provision was not confined tomoney in this narrow sense.[39] The wider meaning (described at [C]) does not fit the statutory context either.It would include gifts of services, personal property, goods and chattels and even land.We consider it is clear that Parliament did not intend to include such gifts within anyof the formulations of s LD 3(1)(a).[40] We therefore reject the submission on behalf of the Commissioner thatthe words "monetary" and "money" used in s LD 3(1)(a) are limited only to cashpayments and the like. We consider that the dictum of Cooke J in Mills v Dowdall,that a forgiveness of debt does not result in the acquisition of any property bythe person forgiven,26 is not determinative of the issue in this case. The statement wasmade in a different context where the focus was on the matrimonial propertyimplications of a purchase of shares and of a house, followed by forgiveness of aportion of the purchase price. The point the Court was making was that subsequentforgiveness of the debt representing the purchase price of these assets did not result inthe debtor acquiring a property interest in those assets. Moreover, we observe thatRichardson J in the same case was of the view that the deed of forgiveness wasproperly analysed as a gift "of a monetary sum by way of forgiveness of that debt, notof the shares or the land". 27The legislative history[41] Counsel for the Commissioner placed considerable emphasis on the legislativehistory and other extrinsic aids to identify Parliament's purpose for ss LD 1 and LD 3.26 Mills v Dowdall, above n 11, at 156.27 At 159.[42] The starting point is in 1962 when a tax benefit for a charitable gift was firstintroduced by s 84B of the Land and Income Tax Act 1954.28 This section providedfor a special exemption from assessable income of a qualifying "gift (not being atestamentary gift) of money".29 The Minister of Finance is recorded in Hansard assaying:30Fourthly, the donations must be in money in amounts of £1 or more, and mustbe evidenced by a receipt to be sent in with the taxpayers' income return eachyear.[43] From 1 April 1978, the special exemption from assessable income became arebate of income tax.31 However, the Income Tax Acts of 1976 and 1994 continued torefer to gifts of "money".32[44] In 2001, the Government conducted a review of the tax treatment of charitieswhich resulted in a discussion document in which it was recorded that donations ofmoney needed to be in cash in order to qualify for the tax rebate:33At present, individuals can claim a tax rebate at a set 33 cents in the dollar upto a maximum of $1,500 of donations made Donations must be in cash inorder to qualify.[45] At the same time, the Government decided not to pursue a change in policy toallow for the tax rebate to be extended to non-cash donations.34 The discussion paperappears to proceed on the basis that "non-cash" donations are the same as donationsof goods and services. Yet the discussion paper did not engage expressly withthe question of where the boundary lies between these two categories.28 Inserted into the Land and Income Tax Act 1954 by s 4 of the Land and Income Tax AmendmentAct (No 2) 1962.29 Land and Income Tax Act, s 84B(2).30 (23 November 1962) 333 NZPD 2894–2895.31 The rebate was inserted into the Income Tax Act 1976 by s 9 of the Income Tax Amendment Act(No 2) 1977, through repeal of s 58 and enactment of s 56A, with effect from 1 April 1978.32 Section 56A of the Income Tax Act 1976, and s KC 5 of the Income Tax Act 1994.33 Michael Cullen, Paul Swain and John Wright Tax and Charities: A government discussiondocument on taxation issues relating to charities and non-profit bodies (Policy Advice Divisionof the Inland Revenue Department, June 2001) at [11.7].34 At [11.9].[46] Subsequently, s KC 5 of the Income Tax Act 1994 was replaced by s KC 5 ofthe ITA 2004, which also provided that a taxpayer was allowed a rebate for a gift ofmoney of $5 or more made by the taxpayer.[47] Another government discussion document in 2006 considered the possibilityof extending the tax rebate for cash donations to include non-cash donations such asshares and other property.35 Legislative changes in the United Kingdom and Australiawere examined but a key concern for the government was that, if similar measureswere adopted in New Zealand, there could be difficulties in valuing non-cashdonations:4.28 Adopting any of these measures in New Zealand would recognise thevalue of non-cash donations and could encourage more donations ofthis kind. However, a key concern for the government is the difficultyof valuing non-cash donations, which could result in tax avoidance aswell as significant compliance and administrative costs.[48] In this paper also, the boundary between what counted as "cash" and"non-cash" donations was not addressed. No change in legislation occurred followingthe 2006 discussion document.[49] In 2007, s KC 5 of the ITA 2004 was amended, with effect from the 2008-2009income year. The intention was to encourage a culture of charitable giving inNew Zealand by, among other things, removing rebate thresholds for individuals andremoving the deduction limit for charitable donations by companies.The Commentary on the Bill dealt with the amendments to the gift rebate provision asfollows:36Under current law, individuals are entitled to a tax rebate at a set 33⅓ cents inthe dollar up to a maximum of $1,890 for cash donations made to doneeorganisations. Companies and Māori authorities are entitled to a deductionfor cash donations made to donee organisations but the deduction cannotexceed 5 percent of their net income before taking into account the donationdeduction.35 Cullen and Dunne, above n 12.36 Peter Dunne Taxation (Annual Rates, Business Taxation, Kiwisaver, and Remedial Matters) Bill:Commentary on the Bill (Policy Advice Division of the Inland Revenue Department, May 2007)at 102.[50] The reference in this commentary to "cash donations" differs from the statutorylanguage used, referring to gifts of "money". As the Commissioner accepts,the reference to cash cannot be taken literally in this context as various equivalents tocash also qualify as gifts of money. We do not consider that imprecise paraphrases ofthis kind provide any real assistance in interpreting the statutory language.[51] Subsequently, when s KC 5 of the ITA 2004 was included in the ITA 2007,37the phrase "any gift of money of $5 or more" changed in s LD 3(1)(a) to "a gift of$5 or more".38 Under s ZA 3(3) of the ITA 2007, it is clear that the provisions ofthe ITA 2007 are the provisions of the ITA 2004 in rewritten form and are intended tohave the same effect as the corresponding provisions in the ITA 2004. However, unders ZA 3(5) of the ITA 2007, s ZA 3(3) does not apply to a new law listed in sch 51,which contains identified changes in legislation. Neither ss LD 1 nor LD 3 appear insch 51.[52] We agree with Mr Goosen's submission that Parliament did not intend there tobe a change in meaning when the word "money" was omitted from s LD 3(1)(a) ofthe ITA 2007. Thus, the phrase "a gift of $5 or more" (in s LD 3(1)(a) of the ITA 2007)was intended by Parliament to have the same meaning as "any gift of money of $5or more" (in s KC 5(1) of the ITA 2004). And, as we have already described,the phrase "a gift of $5 or more" was subsequently replaced with the phrase"a monetary gift of $5 or more" in s LD 3(1)(a) of the ITA 2007.39[53] After the High Court decision in this case, s LD 3 was amended again torespond to the interpretation of s LD 3 adopted by the High Court. Such anamendment was sought by officials who reported to the Finance and ExpenditureCommittee as follows:4037 In effect from 1 April 2008 and applicable to tax on income derived in the 2008–2009 income yearand later income years: s A 2(1) and (2) of the Income Tax Act 2007.38 Section ZA 6(1) of the Income Tax Act 2007 provides that "Schedule 52 (Comparative tables ofold and rewritten provisions) sets out corresponding provisions in the Income Tax Act 2004, and this Act at the commencement of this Act." Schedule 52 shows that s KC 5(1) of the IncomeTax Act 2004 corresponds to ss LD 2 and LD 3 and sch 32 of the Income Tax Act 2007.39 From 27 February 2014: Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters)Act 2014, s 103.40 Inland Revenue Taxation (Annual Rates for 2018–19, Modernising Tax Administration, andRemedial Matters) Bill: Officials' Report to the Finance and Expenditure Committee onSubmissions on the Bill (November 2018) at 279–280.Issue: Debt forgiveness and giftsSubmissionA recent court decision in Roberts v Commissioner of Inland Revenue(the Roberts case) held that debt forgiveness qualifies as a gift undersection LD 3 of the Income Tax Act 2007, which in turn makes debtforgiveness eligible for donation tax credits and gift deductions. Currently,the section refers to a "monetary gift of $5 or more".This decision is contrary to the policy intent, which is that only monetary giftsof cash, including payments made by way of electronic bank transfers, creditcards, and cheques, qualify as gifts. They do not include gifts in kind or debtforgiveness.From 1 April 2008, following the re-write of the Income Tax Act 2007,the language of the provision has undergone some changes for languagesimplification reasons, but at no time has there been an intention to change thepolicy intent. Officials consider that the judicial interpretation in the Robertscase is an unintended consequence arising from the rewrite of the donation taxcredit rules.Officials therefore recommend that a remedial amendment be made tosection LD 3 of the Income Tax Act 2007 to replace the existing words"monetary gift of $5 or more" with the original wording "gift of money of $5or more". This will remove a significant risk to the tax base.Officials propose that the application date of the amendment be 1 April 2008,the commencement of the Income Tax Act 2007. This would be in conjunctionwith a savings provision for taxpayers who have already taken a position inreliance on the current wording, if they have filed a return or a donation taxcredit claim. This retrospective application date in conjunction with a savingsprovision is consistent with the general approach to remedial rewriteamendments.[54] Section LD 3(1)(a) was subsequently amended on 18 March 2019 to haveretrospective effect from 1 April 2008.41 In s LD 3(1)(a), "monetary gift" was replacedwith "gift of money". However, due to an exception (or carve out) created bythe amending legislation, the amendment to s LD 3(1)(a) does not apply toMrs Roberts.42 The Commissioner accepted this appeal must be determined onthe wording of s LD 3(1)(a) prior to its amendment on 18 March 2019. But counselfor the Commissioner submitted that the subsequent amendment to s LD 3(1)(a)41 Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters)Act 2019, s 230.42 Section 230: the amendment does not apply to a person who took a tax position in the periodbetween 1 April 2008 and 15 January 2019. See also Finance and Expenditure Taxation (AnnualRates for 2018–19, Modernising Tax Administration, and Remedial Matters) Bill(16 January 2019).confirms it was not Parliament's purpose for gifts of forgiveness of debt to qualify fordonations tax credits before the amendment was made.43Policy factors[55] The Commissioner advanced two main policy reasons for requiring donationsto be in cash and excluding the forgiveness of debt, namely:(a) avoiding significant compliance and administrative costs; and(b) the difficulty of valuing non-cash donations, which could result in taxavoidance.[56] Elaborating on these claims, Ms Kern submitted that if a forgiveness of debtqualified for donations tax credits, the Commissioner would, as a first step, need to besatisfied that a loan had in fact, at some time in the past, been made by the donor.Citing the present case as an example, she argued it can sometimes be difficult to verifytransactions where record keeping is poor and the loan was made long before the debtis forgiven.44[57] On the second point of tax avoidance, Ms Kern submitted that to allow aforgiveness of debt to qualify as a charitable gift would provide opportunities forunscrupulous taxpayers to gain inappropriate tax refunds in a number of ways.First, taxpayers could manipulate books of account to reflect loans that have insubstance not been made. They could potentially then claim rebates and receive cashrefunds where no charitable donations have been made. This could pose a risk to therevenue base that would involve increased administration costs for the Commissioner.Second, taxpayers could sell assets (such as motor vehicles) to a charitable entity atsums above the market value of the goods, while leaving the sale price outstanding asvendor finance. If such loans are later forgiven there could be opportunities fortaxpayers to claim rebates based on higher amounts than the true value of the gifts.4543 We see no merit in this argument and do not discuss it further.44 Counsel relied on the complex factual situation which needed to be clarified during the disputesreview process.45 Counsel also argued that, even if a true cash loan is made, valuation issues can arise in respect ofthe forgiveness of such debts — for example, if the charity is insolvent as discussed at [18] above.The reality of the legislative history and policy factors[58] We consider there has for a number of years been somewhat of a disconnectbetween the actual wording of the legislation in question and the commentary ordiscussion generated by officials. As early as 2001 the government review spoke ofthe need for donations to "be in cash in order to qualify".46 Yet the legislation madeno such requirement and the Income Tax Act 1994 spoke of "any gift of money"— not cash. As noted above, the review appeared to equate "non-cash" donations withdonations of goods and services. It seems that the 2001 review did not analysethe statutory word "money" or address the legal meaning of "money" and wherethe boundaries of this term might lie.[59] The same might be said about the 2006 discussion document. The legislationcontinued to refer to "any gift of money of $5 or more",47 whereas the discussiondocument spoke of "non-cash donations" and the difficulties that might arise fromvaluing such gifts. Again, no attempt was made to offer an analysis of the statutorywording and what might, or might not, fall within the statutory provisions as definedin the legislation.[60] Similar observations can be made of the officials' commentary on the bill underconsideration in 2007. The discussion was focused on "cash donations" with noattempt made to analyse the statutory terms "money" or "monetary".[61] It is noteworthy that in the officials' report following the High Court judgment(quoted at [53] above), officials spoke about the policy intent of the legislation. It wassaid that "only monetary gifts of cash, including payments made by way of electronicbank transfers, credit cards, and cheques qualify as gifts. They do not include gifts inkind or debt forgiveness." This appears to be the first time the so-called policy intenthad been expressed in this manner to include the issue of forgiveness of debt.[62] Having carefully considered the legislative history described above, we aresatisfied it provides no support for the interpretation of "monetary" or "money"46 Cullen, Swain and Wright, above n 33, at [11.7].47 Income Tax Act 2004, s KC 5(1).contended for by the Commissioner. Comments in reports by officials about "cash"do not assist the Commissioner when that is not the wording of the statute, and the termappears to have been used in a broad sense and by way of contrast with gifts of goodsand services. The task of the Court is to interpret the words used in the statute, notparaphrases, and in particular imprecise paraphrases, used in discussion papers andofficials' reports. We should add that comments by officials, unless they form part ofthe parliamentary record, are not an especially reliable, or orthodox, form of legislativehistory.[63] We turn finally to the policy grounds advanced by the Commissioner as drivingthe interpretation she advances. None of these policy arguments are compelling.[64] The first contention is that excluding forgiveness of debt avoids significantcompliance and administrative costs. We agree with Mr Coleman that the concernsadvanced under this ground are exaggerated. If Parliament is concerned about suchmatters it would be able to address these concerns through more detailed and specificdrafting of the statutory provisions.[65] Second, we are not persuaded that greater administration costs will arise withthe inclusion of forgiveness of debts. Significant investigation and checking may berequired for tax rebate claims in relation to gifts of cash, depending on thecircumstances of the giving.48 Concerns about tax avoidance are overstated.And there are now robust statutory mechanisms in place to deal with any instances oftax avoidance in this context.49[66] In summary, we do not find any of the policy grounds advanced bythe Commissioner to be persuasive. Certainly, the arguments advanced underthe policy head cannot succeed in carrying the day in circumstances where the wordsused in the statute do not support the Commissioner's case and the legislative historyis at best unhelpful.48 As illustrated in Church of Jesus Christ of the Latter-Day Saints Trust Board v CommissionerInland Revenue [2019] NZHC 52.49 Income Tax Act 2007, s GB 55, inserted in the Act with effect from 1 April 2019.Result[67] The appeal is dismissed.[68] The appellant must pay the respondent costs for a standard appeal on a band Abasis and usual disbursements.Solicitors:Crown Law Office, Wellington for AppellantKeam Standen, Tauranga for Respondent