Inland
Revenue can continue steps to bankrupt Veena and Yagashwar Singh for tax debts
in excess of one million dollars following their purchase and sale of 39
properties over a five year period. The
Court of Appeal dismissed their complaints that tax staff did not properly
consider their five requests that tax be written off on grounds of
hardship.
The Court was told a
2008 tax audit identified undisclosed property transactions by the Singhs. They were invited to make a voluntary tax
disclosure which would have the effect of reducing potential tax
penalties. They disclosed sixteen
property transactions, pleading they were unaware that any profits were taxable. Inland Revenue inquiries unearthed a total of
39 taxable property transactions made in a five year period. The Singhs provided little information. Inland Revenue was forced to reconstruct
their tax accounts by using lawyers’ records and bank statements. Mrs Singh was found liable to pay $619,730;
Mr Singh $574,106. These tax debts
included unpaid income tax, unpaid GST, overpaid family assistance benefits,
use of money interest and tax penalties for gross carelessness. Inland Revenue commenced bankruptcy
proceedings against the Singhs in early 2012.
Two years later, accrued interest had increased the tax debt to $1.75
million. Enforcement has been on hold
while the Singhs made successive offers for instalment payments or part
payments. An initial offer to pay $5000
per month has seen a total of $1200 paid by Mr Singh.
The couple made multiple
applications under the Tax Administration Act for tax relief on grounds of
hardship. Inland Revenue refused to
write off the debt. Evidence was given
of incomplete hardship applications with stated income from a carpet business
barely sufficient to meet current mortgage payments leaving less than $200 per
month to meet living expenses. The
Singh’s claim to be also meeting expenses for two dependent sons was confounded
by their later explanation that living expenses were low because they were
being supported by one son. Inland Revenue
investigations of the son’s bank account identified the normal expenses
incurred by a 23-year old male – takeaways, clothing, video games and
electronics – but no supermarket expenditure required to support a household of
four adults.
The Court of Appeal
dismissed the Singhs claim that Inland Revenue staff were biased when
considering their hardship application and had not properly considered their
application. The Singhs had not properly
explained their financial position. Such
information as was provided suggested living expenses were being paid out of
undeclared income. Inland Revenue
handles about ten applications each week for tax write-offs on grounds of
hardship, the Court was told. There was
no evidence senior staff did not bring an impartial and open mind to the
Singh’s applications, the Court said.
Singh
v. Inland Revenue – Court of Appeal (1.11.17)
17.147