Commissioner of Inland Revenue v Heeni

[2019] NZHC 2843

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-128

[2019] NZHC 2843

BETWEEN

COMMISSIONER OF INLAND REVENUE

Creditor

AND

AROHA HEENI

Debtor

Hearing:	31 October 2019
Appearances:	K B Chin, for the Commissioner Debtor in person
Judgment:	31 October 2019

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:

Inland Revenue Department (Ke Bin Chin), Takapuna, Auckland

COMMISSIONER OF INLAND REVENUE v AROHA HEENI [2019] NZHC 2843 [31 October 2019]

[1]    This is a decision on an application to set aside a bankruptcy notice. The Commissioner of Inland Revenue obtained judgment against Ms Heeni for unpaid taxes in the Waitakere District Court on 5 November 2018 for $330,506.28. A bankruptcy notice based on that judgment was issued in February this year. There has been no appeal against the District Court’s decision, and no application for a stay of execution. That decision is final.

[2]    Ms Heeni filed her own application to set aside the bankruptcy notice. The Commissioner contended that nothing in her application showed any grounds for setting aside the bankruptcy notice.

[3]    When  the   matter   was   called   before   me   on   12 September   and   on   3 October 2019, Ms Heeni contended that the Commissioner had made incorrect assessments of her income tax liabilities. On 3 October 2019, I indicated that assessments of income tax are final and conclusive under s 109 of the Tax Administration Act once the period for challenge has expired, and the period for challenge had expired in this case. I noted, however, that the Commissioner has the power to review assessments. That is not something that the Court can compel. That power is under s 113 of the Tax Administration Act.

[4]    I gave Ms Heeni the opportunity to provide further information to the Inland Revenue with a view to persuading the Commissioner to amend the assessments on which the judgment was based. If she could successfully persuade the Commissioner that the assessments are incorrect then I would make adjustments to the bankruptcy notice to allow payment of a reduced sum.

[5]    Ms Heeni took the opportunity to provide further information to the Inland Revenue. The Commissioner has provided two affidavits by its officers addressing the information provided by Ms Heeni. One affidavit is by a compliance officer who conducted an audit of Ms Heeni’s income in the years 2013 to 2016.

The Commissioner made assessments after carrying out an audit. Those assessments were made in 2017. There was not any challenge to those assessments. The officer makes the point that a company run by Ms Heeni was LACQ. The general effect of that is that earnings of the company which were paid out to Ms Heeni were treated as income in her hands.

[6]    Another officer has sworn an affidavit saying that she has reviewed the information provided by Ms Heeni and having reviewed the information she is satisfied that the original assessments can stand.

[7]    Today Ms Heeni has maintained that the assessments are still wrong. I cannot review that matter myself. It was for Ms Heeni to persuade the Commissioner of the errors, not me. As she has not persuaded the Commissioner to exercise the powers under s 113 of the Tax Administration Act, the assessments stand. That means that the judgment in the District Court stands.

[8]    I am not satisfied there is any other ground for setting aside the bankruptcy notice and, accordingly, I dismiss the application. That means that the Commissioner can begin a bankruptcy application based on non-compliance with the bankruptcy notice. That is because the time for complying with the notice has now expired.

[9]    I mention another matter. Ms Heeni said that the liquidators of her company are looking to her for repayment of funds that she withdrew from the company. As I understand it, she says that on the one hand she has been taxed on money that she withdrew from the company; and, on the other hand, the liquidator is looking to her to repay that money. One can understand her concern that she cannot be caught under both demands. While the bankruptcy notice stands, I would strongly urge Ms Heeni to take further advice from other tax specialists or from a lawyer to see if there is some way of resolving that problem. The dismissal of her application to set aside the bankruptcy notice is not the end of the matter. While an act of bankruptcy has occurred, that is only one step towards the final step of making the order for adjudication. Ms Heeni may be able to resist the application once she takes legal

advice with a view to trying to reconcile both the demands of the liquidators against her, with her liability to the Inland Revenue.

[10]I make no order for costs; which may be resolved later in the proceeding.

……………………………….

Associate Judge R M Bell