Court rejects request to transfer tax dispute to TRA


The High Court declined to exercise its jurisdiction to transfer a taxpayer’s tax challenge from the High Court to the Taxation Review Authority (TRA).


The taxpayer challenged the tax notices issued by the taxpayer’s income tax commissioner for each of the 2009 to 2013 income years.

The issue in the taxpayer’s tax challenge was whether certain deposits from abroad in the taxpayer’s bank accounts totaling $953,706 constituted the taxpayer’s gross income. The commissioner considered that the disputed deposits were income from the export of used auto parts. The taxpayer said the disputed deposits were inheritance payments and a deposit owned by a third party. The basic income tax with respect to the disputed deposits was $325,081.75.

The taxpayer had the right to challenge either the TRA or the High Court. The taxpayer chose the latter route, initiating proceedings on February 7, 2020. The taxpayer now wanted to change course. He requested that the Court exercise its own jurisdiction under Section 138N of the Revenue Administration Act 1994 to transfer the High Court challenge to the TRA. In support of his request, the taxpayer invoked a change in his personal financial situation caused by the COVID-19 pandemic. He wanted his tax challenge transferred to the TRA for financial reasons because the TRA had very limited jurisdiction to award costs and because it had less formal processes that could result in savings on its legal fees and costs. of hearing.


The High Court declined to exercise its jurisdiction to transfer the taxpayer’s tax challenge to the High Court because the taxpayer had failed to persuade the Court that the challenge should be transferred to the TRA. The Court concluded the following:

1. The onus was on the taxpayer to persuade the Court to exercise its jurisdiction to transfer a tax dispute to the TRA.

2. The amount of money involved in the dispute was reasonably large and this factor favored the referral of the case to the High Court.

3. Foreign witnesses meant there was a need for translators and video links. The difficulty was reflected in the parties’ estimate that a 6-day hearing was necessary. Since the High Court routinely dealt with translated evidence and video links, this tended to favor the High Court over the TRA.

4. The facts of the challenge were disputed and the challenge also seemed to have some complexity. These issues were reflected in the trial estimate. They also favor the High Court as the appropriate forum.

5. There was no indication that an appeal would be likely and the additional level of appeal, if the challenge was transferred, was considered neutral.

6. The potential financial benefits of a transfer arising from the matters identified by the taxpayer, such as that the TRA had limited jurisdiction to award costs and that its court costs and hearing costs would be less than the TRA, provided that support for a transfer.

Source: Faqiryar against C of the RI [2022] NZHC 552, March 24, 2022, accessed March 26, 2022.


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