Commissioner's Discretion

In situations where a voluntary disclosure has been made, but no previous return for the tax type has been filed, the Commissioner of Inland Revenue (IR) has discretion to allow your client to use Tax Traders to reduce their interest cost. 

Criteria

To be granted Commissioner’s discretion for voluntary disclosures, your client needs to meet certain criteria. Broadly speaking, IR must be satisfied that:

• Your client has been taking reasonable care to comply with their tax obligations. The ‘reasonable care’ test is like that used when applying shortfall penalties. It involves establishing what a reasonable person would do in the same circumstances, considering the taxpayer’s age, health, and background.
• The voluntary disclosure relates to a new liability, not a liability that arose from a return by your client or an assessment of your client.
• The voluntary disclosure is made within a reasonable time after your client becomes aware of the new liability, and before IR has contacted them. ‘Reasonable time’ is generally around three months after the knowledge of any new tax liability, although this will be determined on a case-by-case basis by IR.
• Your client notifies the Commissioner of the details of the new liability and the notification results in an assessment of the new liability or in an obligation to pay the new liability.

What tax types can Tax Traders assist with if Commissioner's discretion is granted?

• Income tax
• GST
• Withholding taxes (RWT, NRWT)
• Employment-related taxes (PAYE, FBT, ESCT, RSCT)
• Further income tax
• Imputation penalty tax
• Approved issuer levy

Based on what Tax Traders is seeing across our client base, there has been a reasonable uptake and success in gaining Commissioner’s discretion since it was broadened in March 2022.

Please contact our team if you wish to discuss specific client situations.