Registered
to an address in Northland while providing shearing services to Southland sheep
stations, Shearing Services Kampupene Ltd failed to deflect Inland Revenue
demands for over $1.5 million in unpaid PAYE plus shortfall penalties with an
argument it enjoyed sovereign exemption from tax by reason of Maori ownership.
Shearing Services was
investigated following non-payment of PAYE for the tax years 2005-2007. Up until January 2005, the company had been
deducting PAYE. The legal issue was
whether shearers and shed hands were now independent contractors (where no PAYE
need be deducted) or were still employees (where PAYE deductions are required). The High Court was told Shearing Services did
not address this central question.
Rather, it argued at length that it was exempt from tax. When the tax investigation started, Shearing
Services refused to provide any information to Inland Revenue, stating that the
Commssioner of Inland Revenue was required to attend Te Kooti marae for
discussions on the issue. The
Commissioner declined the invitation. A
decision from the marae subsequently stated that the information need not be
supplied.
Evidence was given that
Shearing Services claimed to be the trading name for an organisation called
Maunga Hikurangi Koporeihana. Hikurangi
was liable for any PAYE deductions, it claimed.
And Hikurangi itself was exempt from tax, it further claimed. The ultimate ownership of Hikurangi was said to
lie with one hapu: Ngati Hine Hapu Ki Moerewa. Shearing Services said the Te Ture Whenua
Maori Act 1993 exempted the business from tax.
It claimed the existence of a regulation called the Maori Incorporation
Maunga Hikurangi Koporeihana Maori Constitution Regulations 2008 gave legal
existence to Hikurangi and with it the charitable status afforded organisations
under the 1993 Act. Hikurangi’s supposed
legal existence was confirmed by a “certificate of trade” issued by “Kaitaki
Ahuwhenua Trust Inc” – an organisation described by the High Court as being an entity
with no legal basis. This certificate of
trade purported to authorise rights to do business “within and outside the
Dominion of Aotearoa (NZ) where the native title has not been extinguished”. At one point, a representative of Shearing
Services issued a notice of default to Inland Revenue, purporting to hold the
Commissioner of Inland Revenue liable for dishonouring the mana of Hikurangi.
At an earlier Taxation Review
Authority hearing, the judge said documents produced by Shearing Services
indicated a fundamental misunderstanding of the operation of the 1993 Act. Under this Act, only the Maori Land Court and
the Maori Appellate Court are authorised to establish ahu whenua trusts. As a whanau trust, Hikurangi was not created
by court order.
In the High Court, Justice
Mallon said Shearing Services continued to assert claims of Maori sovereignty
and purported to exercise jurisdiction over the Commissioner of Inland Revenue
without addressing the relevant issue of the tax status of its workers. This was not a case of two cultures talking
past each other, she said, it was a case of failing to advance legally valid
grounds to dispute the PAYE assessment. Shearing Services argued that within Maoridom
there are no concepts of employees and independent contractors. These are pakeha concepts. It said tikanga Maori recognised a different
type of working arrangement: Whanau Kiatono and this was not subject to pakeha
laws or tax legislation.
Shearing
Services Kampupene Ltd v. Inland Revenue – High Court (15.12.14)
15.002