{"id":151816,"date":"2026-10-12T11:27:49","date_gmt":"2026-10-12T11:27:49","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=151816"},"modified":"2026-10-13T13:06:28","modified_gmt":"2026-10-13T13:06:28","slug":"new-zealand-tax-disputes","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/new-zealand-tax-disputes\/","title":{"rendered":"New Zealand: Tax Disputes"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-151816","comparative_guide","type-comparative_guide","status-publish","hentry","guides-tax-disputes","jurisdictions-new-zealand"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">PWC Legal<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2022\/08\/PwC_logo_rgb_colour_pos-3.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">PWC Legal<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2022\/08\/PwC_logo_rgb_colour_pos-3.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Tax Disputes laws and regulations applicable in New Zealand<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it necessary for a taxpayer to register with the tax authority? Are separate registrations required for corporate income tax and value added tax\/sales tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A taxpayer with New Zealand income tax or goods and services (<strong>gst<\/strong>) tax obligations will generally need to register with Inland Revenue for an Inland Revenue (<strong>IRD<\/strong>) number. GST registration and income tax registration are separate processes.<\/p>\n<p>GST registration is generally compulsory where taxable supplies exceed, or are expected to exceed, NZ$60,000 in any 12-month period. A person carrying on a taxable activity below the threshold may register voluntarily which can be beneficial where the business incurs costs on which GST has been charged, as registration should allow input tax deductions to be claimed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In general terms, when a taxpayer files a tax return, does the tax authority check it and issue a tax assessment, or is there a self-assessment system where the taxpayer\u2019s own assessment stands unless the tax authority intervenes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>New Zealand has a self-assessment system. Inland Revenue does not routinely review each return. A taxpayer calculates its taxable income and tax liability and the assessment is made when the return is filed with Inland Revenue. Inland Revenue can review or amend that assessment later, so processing a return should not be taken as confirmation that the tax positions adopted are correct.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a taxpayer amend their return after it has been filed? If so, are there any time limits for doing so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Amendments can often be dealt with after filing, but the appropriate route and time limit depend on the issue. A taxpayer can request an amendment or make a voluntary disclosure to correct filed positions. Alternatively, a taxpayer can initiate the formal statutory disputes process to propose an adjustment, generally within four months of filing the relevant tax return with Inland Revenue.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please summarise the main methods by which a tax authority may challenge the amount of tax a taxpayer has paid by way of an initial assessment\/self-assessment. Does the tax authority need any justification to commence such a challenge?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Inland Revenue generally raises queries or commences a risk review as the first step in challenging a taxpayer\u2019s tax position. In our experience, the way a taxpayer responds during the initial review or investigation can materially influence how a dispute develops. Early engagement on the relevant facts, the legal issues and the scope of Inland Revenue&#8217;s concerns can help narrow the matters in dispute and, in some cases, avoid the need for formal proceedings.<\/p>\n<p>A notification of a formal audit or investigation may be issued following the risk review phase. If any issues remain unresolved, Inland Revenue may initiate the formal disputes process by issuing a notice of proposed adjustment (<strong>NOPA<\/strong>). The formal disputes process is an administrative process. Ordinarily, following the issue of a NOPA, the dispute proceeds through a Notice of Response (<strong>NOR<\/strong>), a conference phase, and the exchange of Statements of Position (<strong>SOP<\/strong>s), followed by an independent review process within Inland Revenue (commonly referred to as adjudication). There are limited exceptions to the requirement to complete the full process. A taxpayer wishing to challenge the outcome of adjudication will need to launch a challenge through the judicial process.<\/p>\n<p>Inland Revenue\u2019s Standard Practice Statement SPS 23\/01 \u201cDisputes Process\u201d sets out Inland Revenue\u2019s current disputes procedure. Inland Revenue also has broad statutory information-gathering powers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the time limits for a tax authority to commence a challenge to the taxpayer\u2019s assessment\/self-assessment (disregarding any override of these limits to comply with obligations to provide relief from double taxation under a tax treaty)? Does a tax authority have any options to challenge a self-assessment after expiry of the relevant time limit?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For most income tax disputes, the key limitation is a four-year statute of limitations: Inland Revenue is generally unable to increase an assessment after four years from the end of the tax year in which the return was filed. GST has a comparable four-year rule.<\/p>\n<p>Important exceptions include fraudulent or wilfully misleading returns, omitted income of a particular nature or source and, for GST, knowing or fraudulent failure to make full and true disclosure of material facts. The time limit can also be extended by written waiver.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is tax fraud defined under the laws of your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>New Zealand does not have a single statutory definition of \u201ctax fraud\u201d.<\/p>\n<p>In practice, deliberate conduct is dealt with through the specific civil and criminal provisions in the Tax Administration Act 1994 (<strong>TAA<\/strong>). For civil penalties, s 141E addresses \u201cevasion or a similar act\u201d, including deliberate evasion and specified knowing conduct such as failing to withhold or remit tax or knowingly claiming an unlawful refund. Separate criminal offences apply, including s 143B.<\/p>\n<p>Inland Revenue\u2019s current interpretation of the law on penalties for evasion or a similar act is set out in Interpretation Statement IS 26\/08 \u201cShortfall penalty for evasion or a similar act\u201d<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is tax fraud treated? Will the tax authority conduct a criminal investigation with a view to seeking prosecution and a custodial sentence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Serious deliberate tax offending can lead to civil penalties or criminal prosecution. The shortfall penalty for evasion or a similar act is 150% of the tax shortfall. For the more serious cases, an offence under s 143B TAA can carry up to five years\u2019 imprisonment, a fine of up to NZ$50,000, or both.<\/p>\n<p>Inland Revenue\u2019s current prosecution approach is set out in CS 26\/01 \u201cInland Revenue Prosecution Guidelines\u201d and its interpretation of the evasion penalty in IS 26\/08.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have to abide by any standards or a code of conduct when carrying out audits? Does the tax authority publish any details of how it conducts audits in practice?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Inland Revenue must exercise its powers consistently with the TAA and public law principles, and it publishes fairly detailed guidance on how audits and investigations are conducted. \u00a0IR297 \u201cInland Revenue audits: Information for taxpayers\u201d is a useful starting point for what taxpayers can expect.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have the power to compel the production of information? Does this extend to emails? Is there a right of appeal against the use of such a power?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Inland Revenue has a power to compel the production of information. For certain large multinational enterprises, this can potentially include information held outside New Zealand by non-New Zealand group entities. Information requests can be broad and may extend to electronic records and emails. Inland Revenue can require information or documents considered necessary or relevant to administering or enforcing the tax laws. Legal professional privilege and the statutory non-disclosure right for qualifying tax advice documents remain important protections.<\/p>\n<p>For larger or cross-border reviews, we often see information requests become extensive and iterative. This makes it important to consider document preservation, privilege and the tax-advice document rules early, rather than treating information production as a purely administrative exercise.<\/p>\n<p>There is no statutory right of appeal against a statutory demand for information.\u00a0 However, disputed privilege claims may be determined at court.<\/p>\n<p>Inland Revenue Operational Statement OS 25\/05 \u201cSection 17B Notices\u201d sets out Inland Revenue\u2019s current practice on statutory information requests.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have the power to compel the production of information from third parties? Is there a right of appeal against the use of such a power?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. Inland Revenue can also use its powers to obtain relevant information from third parties, including banks, employers, advisers and government agencies. We see this as an important part of Inland Revenue\u2019s information-gathering toolkit, particularly where information is held by persons other than the taxpayer. The same privilege and statutory non-disclosure protections referred to above can apply. There is no general merits appeal against a statutory demand for information, although specific privilege procedures and public law remedies may be relevant.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to settle an audit by way of a binding agreement, i.e. without litigation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. We regularly see audits and disputes resolved by agreement without litigation. In practice, settlement discussions are often most productive once the key factual and legal issues have been identified and the parties have a realistic understanding of their respective positions. The timing of those discussions can be important, particularly where a risk review or audit is becoming increasingly costly or resource-intensive.<\/p>\n<p>Inland Revenue may settle under its \u201ccare-and-management\u201d power where the outcome is consistent with Inland Revenue\u2019s obligations to protect the integrity of the tax system, while collecting the highest net revenue over time.\u00a0 Settlement is generally documented in a binding written agreement. Inland Revenue\u2019s current approach is reflected in its s 6A settlement guidelines and Interpretation Statement IS 25\/26 \u201cThe Commissioner\u2019s duty of care and management \u2013 section 6A of the Tax Administration Act 1994\u201d.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If a taxpayer is concerned about how they are being treated, or the speed at which an audit is being conducted, do they have any remedies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>New Zealand legislation and court decisions have significantly limited the ability of taxpayers to seek judicial review of Inland Revenue actions, outside of the formal disputes process.<\/p>\n<p>This means that in practice, concerns about the conduct, scope or pace of a review will often first be raised directly with the Inland Revenue case team and, where necessary, escalated within Inland Revenue. Inland Revenue also has a formal Complaints Management Service for concerns that cannot be resolved through the ordinary engagement process. Inland Revenue states that it aims to resolve formal complaints within 20 business days, although more complex matters may take longer.<\/p>\n<p>If the issue remains unresolved, a taxpayer may complain to the Office of the Ombudsman about administrative matters such as delay or unfair treatment. New Zealand does not have a separate specialist tax ombudsman and in practice we rarely see a matter raised to the Ombudsman. The Ombudsman cannot determine the correctness of a tax assessment, and its role is confined to reviewing administrative conduct. The Ombudsmen can only make non-binding recommendations (and cannot order remedies).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If a taxpayer disagrees with a tax assessment, do they have a right of appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A taxpayer will usually only be able to appeal an assessment before a judicial authority if it has worked through Inland Revenue\u2019s formal statutory disputes process. Subject to certain statutory requirements and exceptions, an assessment issued following conclusion of the statutory disputes process may be challenged by filing court proceedings within the applicable response period, generally two months.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the right of appeal to an administrative body (independent or otherwise) or to a judicial body (i.e. a tribunal or court)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The challenge is judicial. A taxpayer may generally commence proceedings in either the Taxation and Charities Review Authority (TCRA, formerly the Taxation Review Authority) or the High Court.<\/p>\n<p>The TCRA is a specialist forum and is generally less formal than the High Court. In practice, relatively few disputes get this far: Inland Revenue recorded 10 tax challenges filed in the TRA\/TCRA or High Court in the 2025 fiscal year and eight in the period to 30 April 2026.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the hearing in public? Is the decision published? What other information about the appeal can be accessed by a third party\/the public?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>TCRA hearings are private, while High Court and appellate court proceedings are generally public, subject to confidentiality or suppression orders. TCRA decisions are published in anonymised form; superior-court judgments are generally publicly accessible.<\/p>\n<p>For disputes that do not reach court, Inland Revenue also publishes anonymised, non-binding Technical Decision Summaries (<strong>TDS<\/strong>s) of many adjudication decisions. In practice, those TDSs can provide useful visibility into how issues are being approached before litigation (although they do not constitute binding precedent).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the procedure mainly written or a combination of written and oral?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Both, but the process is heavily written before litigation. The parties set out their positions through documents such as the NOPA, NOR and SOPs, with a conference phase used to clarify or resolve issues. This means that much of the substantive case is built before any court or tribunal proceeding begins.<\/p>\n<p>If the matter proceeds to litigation, written pleadings, evidence and submissions are generally combined with an oral hearing. The SOP stage is particularly important because the issues and propositions of law that can later be raised are generally confined by the statutory exclusion rules. This makes it important for taxpayers to develop their legal arguments and supporting evidence well before litigation is contemplated. Leaving significant issues unresolved until the court stage can materially limit the taxpayer&#8217;s ability to advance its case.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a document discovery process?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, but formal discovery is mainly a litigation-stage issue. High Court tax challenges are subject to the ordinary civil discovery rules, while the TCRA can deal with document production more flexibly. In practice, much of the document exercise often happens earlier because Inland Revenue has broad information-gathering powers during a risk review, audit or investigation. By the time a matter reaches litigation, the taxpayer may therefore already have identified, reviewed and produced a substantial body of the relevant material.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are witnesses called to give evidence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, where the evidence requires it. Both parties may rely on factual and expert witnesses, who may be questioned and cross-examined. In practice, the extent of witness evidence depends heavily on the nature of the dispute: fact-heavy or valuation matters may require more evidence, while interpretation disputes can often be determined largely on agreed facts and written material.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the burden of proof rest with the taxpayer on an appeal against an assessment?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The general rule is that the burden of proof rests on the taxpayer. In practice, this means contemporaneous evidence is critical. We often see the strength of a taxpayer\u2019s position turn less on the legal proposition itself and more on whether the underlying facts can be demonstrated through documents, records and evidence. For that reason, we generally see value in identifying and preserving the factual record early in an audit or risk review, rather than waiting until the matter has developed into a formal dispute.<\/p>\n<p>Inland Revenue bears the burden in some limited cases. These include certain civil proceedings relating to evasion or similar-act shortfall penalties (or obstruction), where s 149A of the TAA places the onus on the Commissioner, on the balance of probabilities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How long does an appeal usually take to conclude?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no standard timeframe. In our experience, a material dispute can take many months or years to work through Inland Revenue\u2019s audit and formal disputes process before litigation is even contemplated. A complex matter that proceeds to the TCRA or High Court, and then on appeal, can take several years. Timing depends on the complexity of the issues, the evidence required, procedural steps, settlement discussions and whether the decision is appealed.<\/p>\n<p>For businesses, the length of the process can create uncertainty well beyond the disputed tax itself, including financial reporting implications, management time and the ability to undertake transactions or restructurings while the tax position remains unresolved.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the taxpayer have to pay the assessment pending the outcome of the appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Not necessarily. Tax that is subject to a qualifying challenge can generally be treated as \u201cdeferrable tax\u201d and paid once liability is finally determined. However, the Commissioner may require payment where there is a significant risk the tax will not be paid if the challenge is unsuccessful.<\/p>\n<p>In practice, the ability to defer does not necessarily mean that a taxpayer will choose not to pay. The decision is often a commercial one, taking into account cash flow, the amount in dispute and the continuing use-of-money interest (<strong>UOMI<\/strong>) exposure. A taxpayer may therefore choose to pay some or all of the disputed amount even where payment can legally be deferred.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on who may conduct or appear in the appeal on behalf of the taxpayer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The position depends on the forum. In the TCRA, a taxpayer may appear personally or be represented by a barrister, solicitor or any other person. High Court and appellate proceedings are subject to the ordinary rules governing rights of audience and representation, so representation is more formal.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a cost-shifting system whereby the losing party pays the winning party\u2019s legal and professional costs of an appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>This will depend on the forum of the tax dispute. Cost shifting is limited in the TCRA, which has a narrow statutory costs regime. In the High Court and appellate courts, the ordinary court costs rules apply, so the unsuccessful party may be ordered to contribute to the successful party\u2019s legal costs. In practice, that contribution will not usually fully reimburse the professional fees incurred. Taxpayers therefore generally need to assess the economics of a challenge on the basis that a material proportion of their legal and advisory costs may remain unrecovered even if they succeed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to use alternative forms of dispute resolution, such as voluntary mediation or binding arbitration? Are there any restrictions on when such alternative forms of dispute resolution may be pursued?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Private arbitration is not ordinarily used to resolve New Zealand tax disputes. However, there are several opportunities to resolve a matter before litigation. We commonly see issues worked through in correspondence during a risk review or audit, at the formal conference stage (which can be facilitated by a senior Inland Revenue officer not previously involved), or through a principled settlement. After conference, the parties may also agree to opt out of the remaining administrative stages, but this requires the Commissioner\u2019s written agreement. If agreed, the dispute can proceed to the TCRA or High Court.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a right of onward appeal? If so, what are the levels of onward appeal before the case reaches the highest appellate court?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. Broadly, a challenge starting in the TCRA can proceed: TCRA \u2192 High Court \u2192 Court of Appeal \u2192 Supreme Court. If the challenge starts in the High Court, the route is High Court \u2192 Court of Appeal \u2192 Supreme Court. The precise appeal rights and leave requirements vary at each stage, and leave is required to appeal to the Supreme Court.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the main penalties that can be applied when additional tax is charged? What are the minimum and maximum penalties?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The main civil exposure when an adjustment gives rise to additional tax is a shortfall penalty.<\/p>\n<p>The applicable rate depends on the taxpayer\u2019s level of culpability and ranges from 20% to 150% of the tax shortfall: 20% for lack of reasonable care or an unacceptable tax position; 40% for gross carelessness; 100% for an abusive tax position; and 150% for evasion or a similar act.<\/p>\n<p>Statutory reductions and, in some cases, caps can apply (see next question).<\/p>\n<p>Obstruction can increase a shortfall penalty by 25% of the tax shortfall. Separate late-filing or late-payment penalties and UOMI may also apply. Interpretation Statement IS 26\/09 \u201cShortfall penalties \u2013 reductions and other matters\u201d sets out Inland Revenue\u2019s current interpretation of reductions and related matters.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If penalties can be mitigated, what factors are taken into account?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>From a practical perspective, timing is critical. Key statutory reductions for penalties include where the taxpayer makes a voluntary disclosure, where the taxpayer has qualifying previous &#8220;good behaviour&#8221; and where tax shortfalls are temporary. Under the current rules, a full pre-notification voluntary disclosure can reduce lack of reasonable care and unacceptable tax position penalties by 100%, and other shortfall penalties by 75%; a qualifying post-notification disclosure can reduce the penalty by 40%. A further 50% previous-behaviour reduction may also be available where the taxpayer has satisfactory compliance history for the relevant tax type.<\/p>\n<p>This means that identifying and addressing an issue before Inland Revenue notifies an audit can materially change the penalty outcome. Inland Revenue\u2019s Standard Practice Statement SPS 19\/02 \u201cVoluntary Disclosures\u201d addresses what constitutes a full voluntary disclosure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Within your jurisdiction, what areas do you think are most likely to be subject to challenge over the next 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Inland Revenue has intensified its compliance and enforcement activity over the past 2 years, with increased audit activity and a recently-reported return of $11.81 for every dollar invested in compliance, signalling a heightened risk of tax disputes for New Zealand businesses.<\/p>\n<p>Based on Inland Revenue\u2019s current compliance focus and what we are seeing in practice, we expect scrutiny of taxpayers to remain focused on transfer pricing and cross-border financing, transactions with low-or no-tax jurisdictions, supply-chain restructures, and other international tax risks. Inland Revenue continues to identify matters such as non-arm\u2019s-length transfer pricing, mispricing of debt, incorrect withholding tax and potential treaty-shopping issues.<\/p>\n<p>We also expect continued scrutiny of shareholder distributions and shareholder loans, returns of capital and restructuring transactions. Dividend-stripping remains a particular area of sensitivity where shares in a company are sold to a related entity, with little substantive change in the underlying ownership or control of that company. Inland Revenue has made it clear that these arrangements can be challenged under the specific dividend-stripping and general anti-avoidance provisions, including where the transaction is part of a wider corporate structure.<\/p>\n<p>Carried interest is another area to watch. New Zealand currently has no specific carried-interest regime. Carried interest is commonly structured as a return on investment, potentially producing a non-taxable capital gain. However, Inland Revenue has indicated that it is reviewing this tax treatment.<\/p>\n<p>Across these areas, we expect disputes to turn increasingly on the quality of contemporaneous documentation, the commercial rationale for transactions and the consistency between taxpayers&#8217; stated positions and their actual conduct. Taxpayers undertaking significant transactions or restructurings should consider these matters at the planning stage, rather than waiting until an Inland Revenue review begins.<\/p>\n<p>Tax governance is also becoming a more prominent part of the conversation. Inland Revenue expects taxpayers to maintain and regularly test effective tax control frameworks. In practice, we are seeing particular attention on the systems and controls supporting transactional obligations such as GST, PAYE, and FBT, where weaknesses can result in systematic errors. The adequacy of a taxpayer&#8217;s governance arrangements and controls may also be relevant to whether it has taken reasonable care and, consequently, its exposure to penalties.<\/p>\n<p>More broadly, we expect continued targeted compliance campaigns and data-led enforcement from Inland Revenue in areas such as construction, property, trusts, crypto-assets and the hidden economy. Collection of tax debt also remains a key focus area.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your opinion, are there any areas that taxpayers are currently finding particularly difficult to deal with when faced with a challenge by the tax authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In our experience, Inland Revenue is generally accessible and pragmatic to deal with. New Zealand has a relatively clear disputes framework, and there is usually scope for open dialogue with Inland Revenue through correspondence, audit and the conference process. That accessibility can help taxpayers clarify issues and, in many cases, resolve matters without litigation.<\/p>\n<p>The greater difficulty arises where issues between the parties remain unresolved. The formal disputes process can be lengthy and resource-intensive, particularly for complex matters, and a taxpayer cannot simply elect to bypass the remaining administrative stages and obtain a determination from an independent hearing authority. Following conference, a taxpayer can seek to opt out of the remainder of the disputes process, but this requires the Commissioner\u2019s agreement and Inland Revenue\u2019s current practice limits the circumstances in which that agreement will be given.<\/p>\n<p>The adjudication phase provides an important internal safeguard. Inland Revenue\u2019s Tax Counsel Office (TCO) is responsible for taking a fresh look at the dispute and acting impartially and independently of the investigation function. However, it remains an Inland Revenue process rather than a determination by an external party. A dispute will only be subject to an external determination if it proceeds to the TCRA or the High Court.<\/p>\n<p>When taxpayers do reach the courts, although the TCRA provides a specialist forum for tax disputes, New Zealand does not have a separate specialist tax court of the kind found in some jurisdictions. \u00a0There are also currently no specialist tax judges sitting in the High Court.<\/p>\n<p>Because relatively few tax disputes reach court, there can be limited recent judicial authority on complex tax issues. Inland Revenue publishes Interpretation Statements and Technical Decision Summaries which can offer taxpayers some guidance on relevant tax matters, but these do not have binding precedential value.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4139<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/151816","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=151816"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}