News
Unacceptable tax positions: are you owed a penalty refund?
The Government has recognised concerns that some tax shortfall penalties have been imposed when they should not have been.
Draft legislation will give the Inland Revenue Commissioner the discretion not to impose certain penalties and, where penalties have been imposed in the past three years, to allow taxpayers the opportunity to apply for a refund.
In this situation, the penalty must have been imposed for taking an unacceptable tax position (which carries a 20% penalty) and you will need to satisfy IRD that:
- The tax position was taken after 1 April 2003.
- The tax position was the result of a clear mistake or simple oversight.
- You voluntarily disclosed the error or the shortfall was a temporary tax shortfall.
- It is inappropriate to have been required to pay the penalty.
You must apply for cancellation of the penalty in writing before 1 October 2006.
If you should choose to deal with any such request yourself then we recommend that you deal with the specific investigating officer that handled the matter when the penalty was imposed.
Inland Revenue is currently finalising a statement on how it will apply the proposed legislation.
If we can be of assistance or you would like to discuss this further, please contact your regular Bell Gully advisor or:
AUCKLAND
Niels Campbell
Partner
David Simcock
Partner
Willy Sussman
Partner
John Bassett
Senior Associate
Graeme Olding
Senior Associate
Monique Mackie
Senior Solicitor
