The Four Year Time Bar
Many clients may not be aware that there is a statutory time bar. This prevents IRD opening a tax assessment after 4 years from the date of this.
In a case we are aware of was an accountant that represented an established Kiwi corporate taxpayer with long history of tax compliance. The taxpayer amalgamated with a wholly owned subsidiary that was simply not performing financially, and in so doing, inadvertently triggered a possible tax liability that arose from the amalgamation during the tax year ended 31 March 2003. The disputes process was initiated by the IRD, leading eventually to the filing of a Statement of Position ("SOP") in December 2007. The IRD sought to increase the tax payable by the corporate taxpayer in the return.
The 4 year time bar was due to take effect from 31 March 2008. As the taxpayer had filed its SOP however, the IRD was entitled to issue as assessment without the matter proceeding to the Adjudication Unit, and so short cut the disputes process before the Adjudication Unit could rule on the matter.
IRD issued a notice to allow further submissions to be made before the matter was sent to Adjudication, which the client did. The effect of this was to delay the matter beyond 31 March 2008, a point apparently overlooked by the IRD. As the 4 years had passed the matter had become time barred, albeit through inadvertence. Fortunately, the IRD's Adjudication Unit agreed with the client and ruled that the returns of both the amalgamated company and the amalgamating company had become time barred on 31 March 2008, and thus preventing the IRD from making any adjustments to the return in question. The end result; a very happy and relieved taxpayer, and further reason to take very careful note of the time periods in dispute work.
In essence a 31 March 2008 tax return is required to be filed on 31 March 2009. Therefore in March 2013 the tax return cannot be opened to reassessment. If the return is filed on the 7th July 2008, the 4 year time bar starts 7th July 2012. However, if the 2008 tax year was filed 7th July 2009 (overdue) the 4 year time bar starts from 7th July 2013. Therefore, it is important to file returns with the 12 months extension granted to tax agents.
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**[The following is a story that is especially of interest taking into account this year is an election year. While Matley Financial Services does not hide from the fact that they support the National Party, we do recognise the following story is meant to entertain and is not intended to offend.]**
The Grasshopper and the Ant
There is an 'Old Version' and a 'Modern Version' ... Two Different Versions! Two Different Morals!
OLD VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.
The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the ant is warm and well fed. The grasshopper has no food or shelter, so he dies out in the cold.
MORAL OF THE STORY:
Be responsible for yourself!
MODERN VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.
The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving.
TV1, TV3 and Maori TV show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. New Zealand is stunned by the sharp contrast.
How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?
Kermit the Frog appears on Good Morning with the grasshopper, and everybody cries when they sing, 'It's Not Easy Being Green.'
Sue Bradford stages a demonstration in front of the ant's house where the news stations film the group singing, 'We shall overcome.' Gordon Copeland then has the group kneel down to pray to God for the grasshopper's sake.
Michael Cullen exclaims in an interview with John Campbell that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share as the ant is too much of a "Rich Prick."
Finally, the Labour Party drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.
The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the government.
Winston gets his old law firm to represent the grasshopper in a defamation suit against the ant, and the case is tried before a panel of judges that Helen appointed from a list of single-parent welfare recipients.
The ant loses the case.
The story ends as we see the grasshopper finishing up the last bits of the ant's food while the government house he is in, which just happens to be the ant's old house, crumbles around him because he doesn't maintain it. The ant has disappeared in the snow. The grasshopper is found dead in a drug related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighbourhood.
MORAL OF THE STORY:
Be VERY careful how you vote in 2008!!
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New Way to Pay Your Bill - Credit Card
In an effort to provide a variety of ways for our clients to pay their bill, we now offer the service of paying your account by Credit Card.
We now take payments for Visa and Mastercard. If you would like to use this service, please phone the office and speak to Maggie. We do not have EFTPOS facilities at this stage however.
Matley Financial Services now offers the following options for paying your account:
- Annual Billing to be paid off over 12 months (terms and conditions apply)
- Cheque
- Cash
- Credit Card
- Bartercard (terms and conditions apply)
- Direct Credit
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