Office of the Chief Tax Counsel

Report
Office of the Chief Tax Counsel
Jean Cordue
Acting Director
Adjudication
Contents
1. Legislative Provisions
2. The Disputes Resolution Process
3. Office of the Chief Tax Counsel
4. Adjudication
Legislative Provisions
 The main taxation legislation is the
Income Tax Act 2007, the Goods and
Services Tax Act 1985, and the Tax
Administration Act 1994 (TAA).
 The disputes resolution provisions are
found in Part IVA of the TAA & the
challenge provisions are in Part VIIIA.
 The TAA can be found at:
http://www.legislation.govt.nz/act/public
/1994/0166/latest/DLM348343.html
First Steps in the Dispute
Resolution Process
 In an IR initiated dispute, the IR starts
the process by issuing a Notice of
Proposed Adjustment (NOPA)
proposing an adjustment to a
taxpayer’s assessment.
 The taxpayer may respond with a
Notice of Response if they do not
agree with the NOPA.
 It is possible for a taxpayer to initiate
a dispute and this does happen. They
may change their mind or have filed
conservatively to avoid penalties.
Conference Phase
 Following the issue of a Notice of
Response to the NOPA, there will
usually be a conference. This may be
facilitated by a senior IR officer who
has not previously been involved.
 The role of the facilitator is to get all
the information on the table, help both
parties understand the issues, and
achieve resolution if possible.
 A number of disputes are resolved and
settlements made during this process.
Further Steps in the Disputes
Resolution Process
 If the matter is not resolved, the CIR
will issue a disclosure notice and a
Statement of Position (SOP). This will
discuss the facts, evidence, issues and
propositions of law.
 The Taxpayer has two months to
provide a SOP.
 IR has a right of reply in respect of any
new issues raised.
 If the dispute is not resolved it is
referred to Adjudication.
Opting out of the Process
 Section 89N provides the taxpayer and
the CIR can agree in writing not to
complete the disputes process and to
proceed to a hearing. This is called
“opting out”.
 A taxpayer may make a request to opt
out and a senior IR officer will consider
the request.
 There are a number of situations
where IR will automatically agree. In
every case, the taxpayer must also
have participated meaningfully in the
conference.
IR Guidelines for Opting Out
IR will automatically agree to Opting Out
if:
 The core tax is $75,000 or less;
 Turns on questions of fact only;
 Dispute concerns facts and issues that
are waiting to be resolved by a court;
or
 The dispute concerns facts and issues
that are similar to those previously
considered by the Adjudication Unit.
4
Occurence
4
Conference
Adjudication
Disclosure Notice
Finalisation
1
Commissioner
issues NOPA
2
Taxpayer issues
Notice of Response
rejecting NOPA?
NO
1
Assessment issued
YES
2
Commissioner
accepts taxpayer's
contentions?
YES
1
End of process
1
NO
In taxpayer's favour
Conference
takes place
1
End of process
2
1
Disputed issues
resolved?
YES
In Commissioner's favour
Assessment issued;
end of process
1
NO
Commissioner issues
disclosure notice and
statement of position
2
Taxpayer issues
statement of
position?
NO
1
Assessment issued
YES
1
Commissioner amends
his statement of
position to address any
new matters in
taxpayer's statement of
position
2
Is issue resolved
at this stage?
NO
YES
In TP's favour
In CIR's favour
1
End of process
1
Assessment issued
1
Assessment referred
to Adjudication
In TP's favour
1
Adjudicator
determines issues
1
End of process
In CIR's favour
1
Assessment issued;
taxpayer may challenge
in court
Standard Practice Statements
 SPS 11/06 Disputes resolution process
commenced by a taxpayer
 Link
http://www.ird.govt.nz/technicaltax/standard-practice/disputes/sps-11-06disputes-commen-taxpayer.html
 SPS 11/05 Disputes resolution process
commenced by the CIR
 Link
http://www.ird.govt.nz/technicaltax/standard-practice/disputes/sps-11-05disputes-commen-cir.html
Office of the Chief Tax Counsel
 The Office of the Chief Tax Counsel
(OCTC) provides a wide range of
advice and services to and on behalf of
the Commissioner and to internal and
external customers.
 OCTC is responsible for providing
technical advice, specifically about the
interpretation and application of
taxation law.
 The Adjudication Unit is part of OCTC.
Adjudication
 Adjudication is part of the disputes
resolution process. This process was
designed so that tax disputes could be
resolved at an early stage.
 Adjudication is to take a fresh look at a
dispute, providing an independent and
impartial decision on the issues in the
dispute before any adjustment to an
assessment is made.
Adjudication Outcomes
 Adjudication carries out comprehensive
research and analysis of the law. It considers
the correctness of legal and factual
arguments raised by the taxpayer and by IR
in deciding whether an adjustment should be
made.
 A report on the reasons for a decision is
issued to both the taxpayer and the Inland
Revenue investigator.
Facts and Figures for disputes
 Adjudication deals with between 65-88 cases
per year.
 Adjudication finds fully or partially in the
CIR’s favour in 75-80% of cases.
 The Taxpayer wins around 20-25% of cases.
 A very small number of cases have to be
returned to the parties because of missing
evidence or authorities or arguments
overlooked.
What Adjudication is and is not
 Adjudication is not mediation, nor is an
adjudicator required to investigate.
 Consequently, an adjudicator very rarely
meets with either the taxpayer or the Inland
Revenue investigator involved in a dispute.
 Adjudication is independent of the
Commissioner's investigative or audit
function, and adjudicators are either
qualified accountants or solicitors.
What happens at and after
Adjudication?
 A team of 3 work on the disputed
matter.
 There will be an adjudicator, a
manager and a sign off. A report on
the reasons for a decision is issued to
both the taxpayer and the investigator.
 If a decision finds in favour of the
taxpayer, the CIR has no right of
appeal.
 However, if the adjudicator finds in
favour of the CIR, the taxpayer may
appeal to the TRA or the HC.

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