New Zealand Case Law: Decisions & Judgments

Topic

Tax avoidance

Legal area

Court

3 Sept 2020

COMMISSIONER OF INLAND REVENUE v FRUCOR SUNTORY NEW ZEALAND LIMITED [2020] NZCA 383

Citation

[2020] NZCA 383
Court

Court of Appeal

The Court of Appeal held the funding arrangement was a tax avoidance arrangement under s BG 1 because it was an artificial and contrived mechanism to convert a parent equity subscription effectively into deductible interest by packaging it with a $55.4m bank-funded amortising component and a forward purchase; as a matter of commercial and economic reality $55.4m was the effective loan and the balance of the $66.51m claimed deductions represented repayment of principal rather than genuine interest. The Commissioner was entitled under s GB 1 to reconstruct deductions to allow interest only on t…
29 Nov 2019

CULLEN GROUP LIMITED v THE COMMISSIONER OF INLAND REVENUE [2019] NZHC 3110

Citation

(2019) 24 PRNZ 703
Court

High Court

The applications were dismissed because Cullen Group failed to provide credible security or sufficient reason to stay a costs judgment; the relatively small unpaid costs ($505,399.55) and lack of evidence that liquidation was unavoidable meant the appeal was not shown to be rendered nugatory except by the company's own decision, a party cannot force a stay by threatening its own liquidation, there was no substantial dispute about the debt absent a stay, and Cullen Group showed no arguable defence or solvency warranting restraint of liquidation.
3 Oct 2019

COMMISSIONER OF INLAND REVENUE v COMMERCIAL MANAGEMENT LIMITED [2019] NZCA 479

Citation

[2019] NZCA 479
Court

Court of Appeal

The Court allowed the appeal, concluding the High Court erred in restoring the companies under s 329: the applicants failed to provide the necessary factual material and explanation required for a s 329 application, the long unexplained delay and the risk of nugatory or perverse asymmetric tax outcomes meant restoration was not just and equitable, and the exercise of discretion was therefore set aside.
12 Mar 2019

CULLEN GROUP LTD v THE COMMISSIONER OF INLAND REVENUE [2019] NZHC 404

Citation

[2019] NZHC 404
Court

High Court

The arrangement was a tax avoidance arrangement: although it fitted the literal AIL/NRWT rules, its commercial and economic substance was that Mr Watson remained in effective control and was on both sides of the loans, no new offshore funding was introduced, and the AIL concession was deployed in a manner outside Parliament's purpose and contemplation with a more-than-incidental effect of altering tax incidence; consequently the arrangement was void under s BG 1 and the Commissioner lawfully counteracted by assessing NRWT; the assessment was not time-barred in the circumstances of this case.
19 Feb 2018

EMBORION INTERNATIONAL LIMITED v THE COMMISSIONER OF INLAND REVENUE [2018] NZHC 178

Citation

[2018] NZHC 178
Court

High Court

The Court held that Emborion cannot be represented in substantive High Court hearings except by a barrister or solicitor (Re G J Mannix and Lawyers and Conveyancers Act constraints); leave for the director or Mr Russell to act as advocate was refused; the application to have the substantive proceedings determined on the papers was dismissed because the issues are complex, likely to require oral evidence and cross-examination; applications for the Commissioner to pay Emborion's legal fees were dismissed; the matter was placed on the Ordinary Track, category 2, and a detailed timetable with a h…
29 Nov 2017

MUIR v THE TAXATION REVIEW AUTHORITY & ANOR [2017] NZHC 2932

Citation

[2017] NZHC 2932
Court

High Court

Because the Taxation Review Authority proceeding had been finally at an end, there was no proceeding into which an amended notice of claim could validly be filed; therefore the Authority's refusal to accept the document was not an exercise of power subject to judicial review and the High Court lacked jurisdiction to hear the applicant's judicial review proceeding, mandating dismissal under HCR 5.49(6)(a).
31 Jul 2017

GREAT NORTH MOTOR COMPANY LIMITED (IN RECEIVERSHIP) V COMMISSIONER OF INLAND REVENUE [2017] NZCA 328

Citation

[2017] NZCA 328
Court

Court of Appeal

On de novo review the Court found the appellant's returns were wilfully misleading within s 108(2)(a) of the Tax Administration Act 1994, removing the four-year limitation and authorising the Commissioner's reassessments; the appellate standard is de novo review of the Commissioner's opinion and s 330 is restorative but unnecessary to decide the appeal.
11 Nov 2016

GREAT NORTH MOTOR COMPANY LTD (IN RECEIVERSHIP) v COMMISSIONER OF INLAND REVENUE [2016] NZHC 2708

Citation

[2016] NZHC 2708
Court

High Court

The Court held the arrangement constituted tax avoidance under the Ben Nevis two-step test: although interest would ordinarily be deductible, the debenture and corporate structure were artificial, circular and lacked commercial reality so the use of the deduction was beyond Parliament's contemplation; Russell knew or was recklessly indifferent to the misleading nature of the returns so they were "wilfully misleading" for s108(2) purposes allowing reassessment; accordingly the Commissioner correctly disallowed the claimed deductions and losses and validly imposed shortfall penalties for an abu…
17 Jun 2016

HONK LAND TRUSTEES LIMITED v COMMISSIONER OF INLAND REVENUE [2016] NZHC 1316 [17 June 2016]

Citation

[2016] NZHC 1316
Court

High Court

There was no evidence HLL provided the alleged management services to the Trust; the $1,116,000 fee was an ex post facto contrivance to eliminate the Trust's taxable income and transfer it to a loss company; consequently the deduction was disallowed and the TRA and Commissioner were upheld; the conduct demonstrated an unacceptable and abusive tax position with a dominant purpose of avoiding tax; appeal dismissed.
23 Feb 2016

APN HOLDINGS NZ LIMITED v COMMISSIONER OF INLAND REVENUE [2016] NZHC 244

Citation

[2016] NZHC 244
Court

High Court

Judge accepted plaintiffs could not meaningfully brief their principal witness on subpoenaed RBS documents before trial, the documents were highly relevant to objective purpose and effect, and responsible opening could not occur without adequate briefing; the Commissioner's delay in obtaining the subpoena contributed to the prejudice; on balance the interests of justice required granting an adjournment and specific timetable orders were made.