Tailor v Commissioner of Inland Revenue

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA696/2022
[2023] NZCA 178

BETWEEN	BEENA JYATIN TAILOR Applicant
AND	THE COMMISSIONER OF INLAND REVENUE Respondent

CA697/2022
BETWEEN	JYOTIN TAILOR Applicant
AND	THE COMMISSIONER OF INLAND REVENUE Respondent

Court:	Miller and Collins JJ
Counsel:	Applicant in person H W Ebersohn and J W Henderson for Respondent
Judgment: (On the papers)	17 May 2023 at 2.30 pm

JUDGMENT OF THE COURT

The applications to extend time to appeal are dismissed.

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REASONS OF THE COURT

(Given by Miller J)

Beena and Jyotin Tailor seek an extension of time to appeal from their adjudications in bankruptcy.
The orders were made on 22 September 2022, in reliance on tax liability assessments which were the subject of default judgments in the District Court and subsequent bankruptcy notices.[1]
[1]Proceedings were filed in the District Court on 19 February 2020. Bankruptcy notices were issued in May 2021.
The applicants wish to contest the default judgments, saying they were wrongly denied the right to offset rental losses against their PAYE liabilities and the Commissioner wrongly clawed back Working for Families tax credits.
Smith v Commissioner of Inland Revenue is directly on point.[2] There can be no doubt that there has been an act of bankruptcy – failure to comply with a bankruptcy notice – and the tax assessment on which the notice was founded is deemed correct unless challenged under the relevant processes in the Tax Administration Act 1994.[3] This the applicants failed to do. No purpose would be served by extending time to appeal the adjudications.

Result

[2]Smith v Commissioner of Inland Revenue [2019] NZCA 521.

[3]Tax Administration Act 1994, s 109. The Commissioner initiated the disputes procedure following an audit. The assessments followed in October 2018. Any challenge ought to have been brought within two months after that: ss 89AB(4)(a) and 138B.

The applications are dismissed.
There are no orders for costs.

Solicitors:
Crown Law Office, Wellington for Respondent

CaseChat Overview and Summary

Beena and Jyotin Tailor sought an extension of time to appeal their adjudications in bankruptcy. The applicants argued that they were wrongly denied the right to offset rental losses against their PAYE liabilities and that the Commissioner wrongly clawed back Working for Families tax credits. The Court of Appeal dismissed the applications. The court held that the applicants had failed to challenge the tax assessment within the required timeframe and that there was no purpose in extending the time to appeal the adjudications. The applicants' failure to comply with a bankruptcy notice constituted an act of bankruptcy, and the tax assessment on which the notice was founded was deemed correct unless challenged under the relevant processes in the Tax Administration Act 1994. The Commissioner had initiated the disputes procedure following an audit, and the assessments followed in October 2018. Any challenge ought to have been brought within two months after that. The applications were dismissed, and there were no orders for costs.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established