“A majority of the Supreme Court, Tipping, McGrath and Gault JJ, has decided that, although the claimed deductions complied with the ordinary specific provisions in income tax legislation under which they were claimed, the Trinity scheme involved tax avoidance arrangements which were void under the legislation”
“The Court has also upheld penalties imposed on the appellants under the Tax Administration Act 1994 for taking an abusive tax position in claiming the deductions”
This is an appeal from the trinity cases that hit the headlines here over the last few years.
Tourism operator wins seven-year fight with IRD A tourism operator has won a case against Inland Revenue to have $6.28 million in goods and service tax paid back after a seven-year fight over a cheque that bounced.
“At the time Inland Revenue said it would investigate the case but during the investigation an automatic computer-generated statement and cheque was sent out to the company accidentally paying out the amount owed. The IRD then put a stop on the cheque, causing it to bounce”
The IRD then retrospectively changed the law and claimed that the taxpayer wasn’t entitled to the refund. However the court has said that the taxpayer was entitled to the refund.
Glenharrow Holdings Ltd v Inland Revenue
Previously The Court of Appeal had dismissed Glenharrow’s appeal and reduced Glenharrows refund.
The Supreme Court has confirmed that ruling, agreeing that the Commissioner was entitled to invoke s 76 of the GST Act 1985 and to treat the arrangement as a tax avoidance. The Court has found that the arrangement entered into to defeat the intent and application of the Act: the price was not paid in economic terms, even though as between the parties a debt was discharged. The structure adopted by the parties achieved no economic effect and nothing significant in commercial terms.