Flaws in New Zealand tax disputes process

Yan, Liya
Smith, Nigel
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Master of Business
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Auckland University of Technology

The tax disputes process has been a popular topic for some time. Numerous professionals have openly critiqued current tax disputes process since the introduction of the legislative disputes resolution process. Most critics have lacked detailed analysis of the process from both a technical and a practical view. This research report forms part of the Master of Business study at Auckland University of Technology. This report first reviews the historical background of the tax disputes process in New Zealand and this also includes the various amendments introduced after the disputes resolution process was introduced in 1996. The analysis focuses on the pre-assessment phases up to Adjudication review phase (for the purpose of this report, assessment, challenges and penalties are not discussed). The report analyses both the legislative and non-legislative requirements of each phase, step by step, under the Tax Administration Act 1994. The analysis indicates a number of problems and flaws in the current disputes process which is supported by the analysis of case law. The author argues that the current legislative disputes process is complicated, slow, costly and unbalanced. The process has not achieved its initial objective as a fair, quick and efficient resolution. The author recommends significant simplification to the current dispute process and proposes both legislation and policy changes to make the process a more fair, quick and efficient way to resolve tax disputes. The legislation should be changed to reflect the fairness for both disputing parties; a tight timetable should be imposed to the disputing parties equally. Finally, the author suggests some alternative options, such as mediation and arbitration process, to fast track dispute process and minimising associated costs. A cost contribution program such as testing case litigation program and compensation policy will also help to improve the tax disputes process in New Zealand.

Notice of Proposed Adjustment , Taxation , Historical context , Tax legislation , Notice of Response , Legislative process
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