Discuss the shortfall penalty regime under the Tax Administration Act 1994
This research focuses on the shortfall penalty regime under the Tax Administration Act 1994. The discussion aims to provide everyone with a clear concept of the New Zealand shortfall penalty regime. Five shortfall penalties are considered: not taking reasonable care (s 141A), unacceptable tax position (s 141B), gross carelessness (s 141C), abusive tax position (s 141D) and evasion or similar acts (s 141E). These provisions are explained by drawing inferences from the words used. The case law provides the main source of explanation for the principle used. The discussion of these five shortfall penalties mainly focuses on the case authority developed from United Kingdom (UK) and New Zealand.
Each shortfall penalty has different penalty rate. A tax shortfall may be considered under a few types of shortfall penalties, but only one type of shortfall penalty will be imposed. A taxpayer can object the penalty imposed on him or her, and challenge the Commissioner’s decision through court.