Tax disputes and litigation

Our team is New Zealand’s market-leading tax disputes team, representing clients during tax investigations and in tax litigation at all levels.

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​​​​​The team partners litigation and tax specialists to provide comprehensive and balanced guidance in the management of tax disputes with the Inland Revenue Department (IRD) and other revenue authorities. The team provides expert court advocacy in first instance and appellate levels. 

The team is at the forefront of tax litigation, including most recently advising:

  • Alesco New Zealand and Telstra New Zealand in test cases as to whether funding arrangements entered into by the taxpayers involving hybrid debt-equity instruments constituted tax avoidance arrangements,

  • Sovereign Assurance in a challenge to the IRD's tax treatment of commission arrangements entered into with foreign reinsurers, and

  • two major financial institutions in disputes relating to structured financing transactions and allegations of tax avoidance (commonly referred to as the "bank conduit cases").

The team has a proud history of involvement in significant court decisions that have shaped New Zealand tax jurisprudence.​

The team provides assistance at all points of interaction with a revenue authority:

  • Audit and investigation: dealing with domestic and international information requests (including privileges from disclosure); compulsory interviews; strategies to reduce exposure to penalties and efficient document management.

  • The Disputes Procedure: management of the largely compulsory and often complex pre-litigation tax disputes procedure. New Zealand tax law incorporates a pre-litigation disputes procedure which needs to be managed carefully to maximise the prospects of positive outcomes and to preserve rights of subsequent court challenge.

  • ​​Litigation: advice and representation in relation to civil procedure; document discovery; interlocutory issues; document collation and management; instructing expert witnesses; the preparation of legal submissions; and court repre​sentation (with Queen’s Counsel or specialist barristers when appropriate).     

​​The multidisciplinary team works closely together to ensure that duplication of effort is eliminated if the dispute progresses beyond the Disputes Procedure to litigation and to optimise the strategic direction of the matter from the outset.

​The team is proactive in identifying opportunities for the resolution of disputes throughout the process and manages negotiations with the appropriate audience to resolve disputes in a satisfactory way prior to litigation. We have established and constructive relationships with the IRD and Crown Law.

​Alesco New Zealand Limited v Commissioner of Inland Revenue
Acted for the taxpayer in a test case in High Court and Court of Appeal litigation addressing the issue of whether funding arrangements entered into by the taxpayer involving Optional Convertible Notes constituted tax avoidance arrangements. 

Sovereign Assurance Company Limited v Commissioner of Inland Revenue
Acted for the taxpayer in High Court and Court of Appeal challenge to the Commissioner’s disallowance of deductions claimed in respect of commission repayments made under life reinsurance treaties with foreign reinsurers.

Telstra New Zealand Holdings Limited v Commissioner of Inland Revenue
Acted for the taxpayer with respect to its discontinuance of proceedings relating it use of Optional Convertible Notes as part of its funding arrangements. The Commissioner had sought to have the discontinuance set aside.  The application was successfully defended.  

Bank conduit litigation
Acting for two major banks in disputes relating to structured financing transactions and allegations of tax avoidance.

Chatfield & Co Limited v Commissioner of Inland Revenue ​
Currently acting on behalf of an accounting firm seeking judicial review of the decision by the Commissioner to issue notices pursuant to section 17 of the Tax Administration Act 1994 requiring the accounting firm to furnish the Commissioner with information.  The section 17 notices were issued at the request of the Republic of Korea’s National Tax Service, made pursuant to the New Zealand – Korea Double Tax Agreement. 

In Re Education New Zealand Trust 
Acted for the Education New Zealand Trust to determine whether its activities relating to the advancement of education were of sufficient public benefit that the Trust was a charitable entity. 

Commissioner of Inland Revenue v Fuji Xerox NZ
Acted for the taxpayer in an appeal by the Commissioner to the Court of Appeal relating to the exercise of the court’s discretion under the Tax Administration Act 1994 to allow a taxpayer to commence challenge proceedings in respect of assessments, outside the statutory response period.

Wilson & Horton Ltd v Commissioner of Inland Revenue 
Successful hearing in the Court of Appeal in a dispute as to whether advertisements sold in the New Zealand Herald to non-resident clients could be zero-rated for the purposes of the Goods and Services Tax Act 1985.

Commissioner of Inland Revenue v National Insurance Company of New Zealand Limited
Acted for the taxpayer in successful hearings in the High Court and Court of Appeal as to whether the taxpayer’s investment in the shares of a merchant bank, and subsequent gain made on sale of this investment, were on capital or revenue account.

DB Group Ltd v Commissioner of Inland Revenue
Successful objection to assessments made by the Commissioner relating to the deductibility of, and application of Non-Resident Withholding Tax to, various payments made under funding arrangements for the New Zealand film The Navigator.

GPO Holdings Ltd v Commissioner of Inland Revenue
Successful objection to assessments made by the Commissioner that purported to include as assessable income, accumulated trading profits of the Government Printing Office business that was acquired by the taxpayer.  

Waste Management NZ Limited v Commissioner of Inland Revenue
Acted for the taxpayer in a successful appeal relating to the deductibility of expenditure incurred in relation to the planning and establishment of a landfill site. 

Commissioner of Inland Revenue v Alcan New Zealand Limited 
Acted for the taxpayer in successful hearings in the High Court and Court of Appeal relating to the application of the trading stock tax rules to a trans-Tasman group of companies. 

Commissioner of Inland Revenue v Lloyds Bank Export Finance Limited 
Acted for the taxpayer in an appeal by the Commissioner to the Court of Appeal relating to the characterisation of notices that had the effect of determining loss balances as assessments for the purposes of the Income Tax Act 1954 and the Income Tax Act 1976, and the ability of the Commissioner to later issue reassessments. 

Piers v Commissioner of Inland Revenue
Acted for the trustees of a superannuation fund in a dispute as to whether gains made on the sale of share investments were assessable income of the fund.

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  • Mathew McKay

    Partner Auckland
  • Ian Gault

    Partner & Deputy Chairman Auckland
  • Mike Colson

    Partner Wellington