Kaumavae v Commissioner of Inland Revenue
[2025] NZHC 1954
•16 July 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2025-404-000184 [2025] NZHC 1954
UNDERs 143B(1)(b) and (f) of the Tax Administration Act 1994
BETWEEN HAITELENISIA KAUMAVAE
Applicant/Appellant
ANDCOMMISSIONER OF INLAND REVENUE
Respondent
Hearing: 14 July 2025
Appearances: T Conder and S Howell for Applicant/Appellant (by VMR) A Lin for Respondent
Judgment: 16 July 2025
JUDGMENT OF VENNING J
This judgment was delivered by me on 16 July 2025 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Holland Beckett, Tauranga
Kayes Fletcher Walker Ltd, Manukau, Auckland
KAUMAVAE v COMMISSIONER OF INLAND REVENUE [2025] NZHC 1954 [16 July 2025]
[1]Haitelenisia Kaumavae pleaded guilty to a charge that:
Between 20 April 2020 and 20 October 2023 (continuing offence) at Pukekohe, [she] aided and abetted the offending of M&H Kaumavae Ltd [the company] that knowingly [did] not provide information (namely PAYE returns) to the Commissioner of Inland Revenue when required to do so by a tax law intending to evade the assessment or payment of tax for the 43 periods ended 31 March 2020 to 30 September 2023.
[2] The offence was under ss 143B(1)(b) and (f), 148, 150A and 150C of the Tax Administration Act 1994 (the TAA).1
[3] Ms Kaumavae subsequently received advice that she may have had an absolute defence to the charge. She applied to set her guilty plea aside. In a decision delivered on 3 April 2025 Judge D J McDonald declined the application.2
[4] Ms Kaumavae seeks leave to appeal on a question of law, namely the precise elements of the offence she pleaded guilty to.3
[5] Counsel agreed that the application for leave to appeal, and the substantive appeal should be heard together.
Background
[6]I take the facts from the judgment of Judge McDonald:
[11] M & H Kaumavae Limited employed seasonal workers from the Islands, principally Tonga, on orchards and fields in the wider Pukekohe area.
[12]The workers were employees of the company.
[13] In Ms Kaumavae’s affidavit sworn in support, which is very brief, the defendant said:
4.0 I just want to say about the people that worked for M & H Kaumavae Ltd in the orchards and fields that they were always paid the full amount for their work with no tax deducted.
5.0 All the workers were paid what they were owed and neither M & H Kaumavae Ltd nor I ever took any money from their wages.
1 On the same date Ms Kaumavae pleaded guilty to three further charges.
2 Inland Revenue Department v Kaumavae [2025] NZDC 6431.
3 Criminal Procedure Act 2011, s 296.
[14] That was developed at the hearing. The gross amount of the wages were paid to the employees who worked for the company. Those employees who were paid the full amount, including what should have been deducted by way of PAYE, have now returned to their home countries. It is not feasible for the Commissioner to attempt to obtain tax payments from those persons as they are outside this jurisdiction.
[7] As to how the present situation arose, Edward Burke who represented Ms Kaumavae at the time deposed for the purposes of Ms Kaumavae’s appeal:
2.I was counsel for Ms Kaumavae when she entered a guilty plea to a charge of aiding and abetting M&H Kaumavae Ltd contrary to ss 143(B)(l)(b) and (f), 148, 150A and 150C of the Tax Administration Act 1994.
3.At that time, I did not consider that Ms Kaumavae had a defence to the Charge. I was unaware of the decision in Pongi or that actual deduction could be a prerequisite for the charge.
4.In discussions with a chartered accountant whom I had briefed to assist me with the file I was alerted to the possible defence when told that a person can only be liable for evading PAYE if they either deducted it from the wages or paid the net amounts. When I learned this, I immediately advised Ms Kaumavae to apply to vacate her plea.
Procedural issues
Further evidence
[8] A number of procedural issues arise. The first is the admissibility of Mr Burke’s affidavit for the purpose of this appeal. The test for the admission of evidence on an appeal is set out by the Privy Council in Lundy v R.4 The Commissioner does not object to the admission of his affidavit. The Commissioner accepts that Mr Burke’s affidavit is relevant to explain why Ms Kaumavae entered her guilty plea. I accept the affidavit meets the test for admission in the interests of justice and accept it for the purposes of the application for leave and the appeal itself.
Leave
[9] The next issue is whether leave to appeal should be granted. Section 296(2) of the Criminal Procedure Act 2011 (CPA) applies. This Court may grant leave to Ms Kaumavae to appeal on a question of law against a ruling by the trial court. The criteria
4 Lundy v R [2013] UKPC 28 at [120].
for determining applications for leave to appeal generally were discussed by the Court of Appeal in W (CA 624/2022) v R.5 They have also been applied by the Court of Appeal to appeals under s 296.6 The proposed question satisfies the requirements of s 296(3).
[10] Again, the Commissioner is not opposed to leave being granted. The Commissioner accepts a decision to refuse to vacate a guilty plea relates to the determination of the charge and if the guilty plea is not vacated the conviction naturally follows.7 As such it is distinguishable from a decision declining to dismiss a charge under s 147 of the CPA for which there is no jurisdiction to appeal.
[11]Leave is granted to Ms Kaumavae to appeal on a question of law.
Question of law
[12] Under s 299 of the Act the Court may at any time amend or restate any question of law to be determined in the appeal if it considers it necessary or desirable to do so.
[13] The initial proposed question of law was whether Ms Kaumavae has a complete defence to the PAYE charge in that she was not required to provide tax information to the Commissioner.
[14] Counsel agree that the initial question involved a mixed question of law and fact and consider the more appropriate legal question is:
Is it an element of the charge of knowingly failing to file PAYE returns that deductions have either been made or recorded?
[15] I agree that the amended question with minor additions to follow the statutory wording is a more appropriate question in the circumstances that arise in this case. The minor additions are:
Is it an element of the charge of knowingly failing to provide PAYE returns with the intention to evade the assessment or payment of tax that deductions have either been made or recorded?
5 W (CA 624/2022) v R [2023] NZCA 397, [2024] 2 NZLR 61.
6 Lo v R [2024] NZCA 445.
7 O (CA 419/2015) v R [2015] NZCA 525; and Ali v R [2023] NZCA 557.
Withdrawal of guilty plea
[16] The circumstances in which the Court may allow a guilty plea to be withdrawn include if, on the admitted facts, the defendant could not have been guilty of the offence charged,8 and if there is a possible defence to the charge of which the defendant was unaware when he or she pleaded guilty whether because of incompetent legal advice or otherwise.9
[17] If the question is answered in the appellant’s favour, then she should be allowed to withdraw her guilty plea.
Statutory background
[18] Section 143B (as relevant to the charge) provides for tax evasion or similar offence:
143B Evasion or similar offence
(1)A person commits an offence against this Act if the person—
…
(b) knowingly does not provide information (including tax returns and tax forms) to the Commissioner or any other person when required to do so by a tax law; or
…
and does so—
(f) intending to evade the assessment or payment of tax by the person or any other person under a tax law; or
…
(2)A person who evades or attempts to evade the assessment or payment of tax by the person or another person under a tax law commits an offence against this Act.
[19]Section 148 of the TAA states:
A person who aids, abets, incites, or conspires with another person to commit an offence (the principal offence) against this Act also commits an offence against this Act.
8 Udy v Police [1964] NZLR 235 (SC); R v Taylor [1967] NZLR 577 (SC).
9 R v Merrilees [2009] NZCA 59; and Watts v R [2011] NZCA 41.
The elements of the offending
The elements of the charge that Ms Kaumavae pleaded guilty to therefore are:
(a)that the company committed the principal offence, namely, knowingly did not provide tax information (the PAYE returns) when required to do so;
(b)the company did so intending to evade the assessment or payment of tax by it or the employees; and
(c)that Ms Kaumavae aided or abetted the offending of the company; and
(d)that at the time Ms Kaumavae knew of the company’s intention to evade the assessment or payment of tax by it, or the employees.
[21] Mr Conder confirmed that Ms Kaumavae accepted her actions aided the company, that the company had not provided tax information (the PAYE returns) when required to do so and that she knew the company had not provided the required information or returns. The issue is whether the Commissioner can establish the intention to evade when failing to provide the PAYE returns in circumstances when the company did not make any deductions for PAYE and the obligation to pay the PAYE passed to the employees.
The District Court decision
[22] In his decision Judge McDonald identified the elements of the charge as above. The Judge noted that the company had an obligation to disclose to the Commissioner in a timely and useful way all information that the tax laws required (s 15B of the TAA) which was not disputed. The company was obliged to furnish a monthly return known as an employer monthly schedule setting out details of employees, salary or wages, PAYE deductions and net payments made. Next, the Judge noted, it was evident that the intent behind the company not filing the PAYE returns was to ensure IRD was not alerted to the fact that PAYE deductions or payments were not being made as required. Again he recorded that was not disputed either.
[23]The Judge’s essential reasoning for dismissing the application was:
[26] Mr Burke’s submissions essentially seem to come down to the suggestion that because a PAYE deduction was never made, s RD 22 of the Income Tax Act 2007 (ITA) is not triggered, therefore, there is no obligation. However, in my view this cannot be right. It would seem contrary to Parliament’s intent that a person be able to escape liability in terms of providing PAYE returns to IRD by ignoring their obligation to deduct funds from their employees’ income for the purpose of PAYE in the first place.
[27] Rather, by virtue of subpart 3C of the Act, it would seem that the obligation to make PAYE returns remains, irrespective of the actual deductions made.
[24]For those reasons the Judge declined the application.
The appellant’s submissions
[25] The argument for Ms Kaumavae is that she has a complete defence to the charge because it is an element of the charge that PAYE deductions have to be made or be deemed to have been made. It is not sufficient that the company had an obligation to file returns.
[26] For the reasons Mr Conder developed in submissions, he argued that the company did not have an obligation to deduct or pay PAYE in this case. The argument relies on the decisions of Pongi v R; Commissioner of Inland Revenue v Buisson; and R v G.10
[27] On the evidence the company made no deductions and paid the employees the full amount. Accordingly, the obligation to pay tax rested with the employees, not the company. Mr Conder referred to and relied on ss RD 4(4) and RD 21(1) of the Income Tax Act 2007. Further, in relation to what is required to establish evasion he referred to the definition from Taylor v Attorney-General:11
“Evade” includes an element of intent, an intention to endeavour to avoid payment of tax known to be chargeable … differentiating evasion from a mere omission to pay.
10 Pongi v R [2012] NZCA 127; Commissioner of Inland Revenue v Buisson [2018] NZDC 13244; and R v G (CA250/2013) [2013] NZCA 146.
11 Taylor v Attorney-General [1963] NZLR 261 (SC).
[28] Mr Conder noted that the elements of evasion, when considered on their own were identified by the Court of Appeal in R v G (CA250/2013) as being:12
(a)an obligation to pay tax;
(b)knowledge of that obligation;
(c)intentionally evading meeting that obligation.
[29] Mr Conder submitted the above elements were equally applicable to the present case so that it was an essential element of the charge that the company had an obligation to pay PAYE, not merely that it had an obligation to file returns. Mr Conder referred to RD 4(1), which provides that an employer “who withholds an amount of tax for a PAYE income payment must pay the amount to Commissioner”. However, where the amount is not withheld RD 4(4) confirms the employee has the obligation to pay. The obligation is repeated in RD 21 which expressly addresses the situation where “for any reason, some or all of the amount of tax for a PAYE income payment is not withheld at the time it is paid to an employee”. In such a case the employee has the obligation to provide the relevant information and pay the deficiency.
[30] While s 168 of the TAA provides that where there is a shortfall of PAYE due to a failure to withhold or deduct an amount of tax the Commissioner may recover that amount as a debt from the employer, in Mr Conder’s submission that is a “debt” obligation distinct from the primary liability to pay tax which, after a failure to deduct, rests with the employee.
[31] In Pongi the Court of Appeal considered the failure to account for deductions under s 143A(1)(d) of the TAA.13 In that case the Court concluded that unless there is a deduction in fact, or a payment of a net sum, PAYE is not deemed to have been deducted. Accordingly, there was no liability under s 143A(1)(d). The correct offence was, instead, the distinct offence of failing to make deductions under s 143A(1)(e), a fine only offence.
12 R v G (CA250/2013), above n 10. In fact, the elements are set out that way by Judge Mabey QC in CIR v Buisson [2018] NZDC 13244 at [8] referring to R v G.
13 Pongi v R, above n 10.
[32] While accepting that the charge in this case differed from that in Pongi, Mr Conder submitted the conclusion of the Court in Pongi was relevant in that it demonstrated there was no obligation to account for PAYE if deductions are not made. Further, the effect of s 168 does not replace that obligation and the intent to evade is still unable to be satisfied.
[33] Mr Conder also referred to the Commissioner of Inland Revenue v Buisson,14 a decision of Judge Mabey QC in the District Court involving a charge under s 143B(2) of the TAA. The Judge accepted that where the Commissioner had failed to prove the defendant did deduct PAYE or that there had been a deemed deduction of PAYE, then as the obligation to pay fell on the employee, the central element of the charge in that case, the obligation to pay, had not been established.
[34] While Mr Conder accepted that the company and Ms Kaumavae’s actions were not tax compliant, he argued that the effect of the Income Tax Act and the TAA is that the tax liability rests with the employees concerned. The company’s liability is as a civil debt under s 168 of the TAA, rather than as a tax obligation capable of supporting a charge involving evasion. Put another way, he submitted it was a pre-requisite of an offence under s 143B(1)(b) and (f) that there be an actual or deemed deduction of PAYE. As there had been no such deduction or deemed deduction in the present case Ms Kaumavae had a complete defence to the charge. The answer to the question posed on appeal should be yes. The appeal should be allowed, and Ms Kaumavae should be acquitted.
[35] In the alternative, Mr Conder submitted that even if the Court considered the wording of the section may be broad enough to support a guilty finding, but it was arguable there may be a defence, the guilty plea should nevertheless be set aside, and the matter should be reconsidered in the District Court.
Analysis
[36]This appeal turns on the wording of the statutory provision in issue.
14 Commissioner of Inland Revenue v Buisson, above n 10.
[37]For convenience I set out the relevant parts of s 143B(1) and (2) again:
143B Evasion or similar offence
(1)A person commits an offence against this Act if the person—
…
(b) knowingly does not provide information (including tax returns and tax forms) to the Commissioner or any other person when required to do so by a tax law; or
and does so—
(f) intending to evade the assessment or payment of tax by the person or any other person under a tax law; or
…
(2)A person who evades or attempts to evade the assessment or payment of tax by the person or another person under a tax law commits an offence against this Act.
[38] In R v G the Court of Appeal considered the text of s 143B and the scheme of Part 9 of the TAA generally:15
[20]There is a clear distinction between the offences under s 143B(1) and (2). The former specify particular acts or omissions in s 143B(1)(a)—
(e) which, if committed knowingly and with any of the intentions or purposes under s 143B(1)(f)-(h) will amount to an offence.
[21]Section 143B(2) is a catch-all provision which does not specify any particular act or omission but which makes it an offence to evade or attempt to evade the assessment or payment of tax either by the person who carries out the acts or omissions or another person. The assessment or payment of tax must be an obligation arising under a tax law.
[22]A critical point of distinction between the offences in s 143B(1) and s 143B(2) is that the former requires only an intention to evade. Under s 143B(1), there does not have to be any actual evasion of the assessment or payment of tax, simply an intention to do so. However, under s 143B(2) an actual evasion is required (except in the case of an attempt, to which we will return later). In that respect, s 143B(2) may be described as a result crime, not a conduct crime.
[23]The wider statutory context is important. Section 143B appears in Part 9 of the TAA, which deals with penalties. Part 9 deals with both civil penalties and criminal penalties. The scheme of Part 9 reveals a pattern of increasing penalties relative to the mental state of the taxpayer. Identical conduct can result in the application of a different
15 R v G (CA250/2013), above n 10, footnote omitted.
penalty depending on the intention of the taxpayer. For example in the group of sections headed “Civil penalties”:
(a)Section 141A provides for a penalty of 20 per cent of the tax shortfall for any taxpayer who does not take reasonable care in taking a tax position.
(b)Section 141B provides for a penalty of 20 per cent of the tax shortfall for a taxpayer who takes an unacceptable tax position.
(c)Section 141C provides for a penalty of 40 per cent of the tax shortfall for a taxpayer who is grossly careless in taking a tax position.
(d)Section 141D provides for a penalty of 100 per cent of the tax shortfall for a taxpayer who takes an abusive tax position.
(e)Section 141E provides for a penalty of 150 per cent of the tax shortfall for a taxpayer who “evades the assessment or payment of tax by the taxpayer or any other person under a tax law” or knowingly does or omits to do one of the actions described in the section, which are similar in nature to those set out in s 143B(1).
[24]In the context of civil penalties, therefore, there are varying levels of penalties depending on the degree of fault on the part of the taxpayer. In this context the degree of fault is measured by the mental state of the taxpayer. The impugned conduct is the same.
[25]Broadly speaking, the same applies in relation to criminal penalties. Section 143 sets out absolute liability offences, which are acts or omissions similar in kind to those described in s 143B(1), but without knowledge and intention requirements. Section 143A lists similar acts or omissions, but in circumstances where there is knowledge on the part of the taxpayer. Section 143B(1) deals with the same actions in circumstances where there is evasive intent.
[26]In the context of s 143B itself, it is notable that the offences described in s 143B(1) are actions which are unlawful in their own right (because they breach s 143A) but attract a greater penalty under s 143B(1) because they are done with intent to evade assessment or payment. It is also notable that, whereas the offences in s 143B(1) are specified actions or omissions done or omitted with the intent to evade assessment or payment, the offence in s 143B(2) is evasion itself (or attempted evasion), so the legislature has differentiated between acts and omissions with intent to evade (s 143B(1)) and acts or omissions that themselves amount to evasion (or attempted evasion) (s 143B(2)).
[39] While I accept Mr Conder’s submission in relation to s 168, namely that it creates a debt, that does not answer the issue which is, whether a breach of the elements of s 143B(1) are made out on the facts in the present case.
[40] The case of Pongi is distinguishable from the present case, primarily because that case concerned s 143A(1)(d) of the TAA, which provided:
(1) A person commits an offence against this Act if the person—
…
(d)knowingly applies or permits the application of the amount of a deduction or withholding of tax made or deemed made under a tax law for any purpose other than in payment to the Commissioner; or …
[41] It was an element of the offence that there be an actual or deemed deduction. In Pongi the Court ultimately concluded there was insufficient evidence to establish that PAYE was actually deducted from the wages of the employees of the appellant’s company or that there had been a deemed deduction in the circumstances of the case.16 It was on that basis that the appeal against conviction was allowed.
[42] In the Commissioner of Inland Revenue v Buisson case Judge Mabey was concerned with a charge under s 143B(2) and in particular, the argument that Mr Buisson had no obligation to pay PAYE as he had not deducted or withheld PAYE.17 The charge in that case was that Mr Buisson had “evaded the payment of PAYE.” The charge was not that he had evaded the assessment of PAYE, but rather that he had evaded the payment of PAYE. The focus of the argument, which the CIR engaged with, was on whether there was evidence to prove Mr Buisson had deducted PAYE or whether there was a deemed deduction which he was obliged to account for. Judge Mabey concluded there was no satisfactory proof the defendant had deducted PAYE and nor was there a deemed deduction. As such there was no satisfactory proof that net wages were paid. The Commissioner could not prove the charge.
[43] In the course of his reasoning, Judge Mabey concluded s 168(1) did not alter the position. I agree with the Judge’s reasoning concerning s 168(1) at [31] and [32] of his reasoning:
[31] Section 168(1) provides for recovery of a debt to the Commissioner when an employer has failed to make deductions as required by the taxation
16 Pongi v R, above n 10.
17 Commissioner of Inland Revenue v Buisson, above n 10.
rules. Section 168(2) enables the Commissioner to pursue both employer and employee concurrently.
[32] Section 168 does not conflict with or override the provisions of s RD4 which renders the employee liable for PAYE in the absence of an actual or deemed deduction by an employer.
[44] However, the decision of Buisson does not address the issue in the present case which arises from the wording of the section in issue.
[45] What the Commissioner had to establish in the present case was that the company did not provide PAYE returns “when required to do so … intending to evade the assessment or payment of [PAYE] tax”. The wording of the charge (which reflected the wording of s 143B(1)(b) and (f)) did not require the Commissioner to prove that the company had deducted PAYE (or that there was a deemed deduction). For the purposes of s 143B(1)(b) the obligation was not to pay PAYE but rather it was to provide information to enable the assessment of the PAYE payable, whoever may ultimately have been responsible to pay it.
[46] Mr Conder’s argument rests on there being an obligation to pay the PAYE for liability to arise. But the wording of the section in the present case does not require that for the offence to be made out.
[47] Mr Conder’s reliance on there being an obligation to pay tax as an element of evasion relies on the comments to that effect in the analysis in R v G and Commissioner of Inland Revenue v Buisson.18 However, in R v G, which Judge Mabey relied on in CIR v Buisson, the discussion regarding the need for there to be an obligation to pay tax for the particular offence of evasion arose in the context that the Court was distinguishing the difference between a mere omission or failure to pay tax, which was not itself an offence, and the breach of a positive obligation to pay tax, which was an offence. Neither case (nor Pongi) is authority for the proposition that there must be an obligation to pay tax for there to be a breach of s 143B(1)(b) and (f). The obligation under that section is to provide information (PAYE returns) when required to do so. Indeed, that point was made by counsel for the taxpayer in R v G, at [33] of that decision.
18 R v G (CA250/2013), above n 10; and Commissioner of Inland Revenue v Buisson, above n 10.
Result
[48]It follows that the answer to the question:
Is it an element of the charge of knowingly failing to provide PAYE returns with the intention to evade the assessment or payment of tax that deductions have either been made or recorded?
is No.
[49] Mr Conder’s alternative submission was that, even if the Court came to that view, the guilty verdict should still be set aside as on the facts Ms Kaumavae may have a defence and she should be entitled to withdraw her plea and defend the charge.
[50] However, given the concessions before the District Court and this Court, I do not consider the grounds for allowing Ms Kaumavae to set aside her guilty plea have been made out.
[51] The Summary of Facts that she pleaded guilty to records, as relevant, that Ms Kaumavae as sole director and shareholder of the company aided and abetted the company knowingly not providing PAYE returns when required by law intending to evade the assessment (or payment) of tax and sought to evade the assessment (or payment) of $1,271,640.25 in PAYE (the figure provided by her counsel).
[52] On the admitted facts, Ms Kaumavae has no defence to the charge. None of the other grounds that could support setting aside the guilty plea apply.
[53]While leave to appeal is granted, the appeal is dismissed.
Venning J
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