1. Company A is an overseas incorporated company and is registered as an overseas company under the New Zealand Companies Act 1993.
2. It is registered for GST in New Zealand with its taxable activity described as ticket selling for non-resident airlines.
3. Company A maintains it buys and sells airline flights in its own right and not as an agent of the airlines.
4. Company A’s GST returns show zero-rated supplies of flights sold and input tax deductions for GST charged by the airlines on supply of flights and the supply of virtual office supplies.
5. The main issues considered in this dispute were:
▪ concerns about Customer and Compliance Services (CCS), Inland Revenue’s handling of this dispute;
▪ whether Company A bought and sold airline flights in its own right;
▪ if Company A bought and sold the flights in its own right, whether its supply of the flights was zero-rated international carriage;
▪ whether Company A is entitled to the input tax deductions it claimed;
▪ whether Company A’s GST registration should be cancelled;
▪ if Company A’s GST registration should be cancelled, whether it could register for GST as a non-resident supplier.
6. There was also a preliminary issue on the onus and standard of proof.
7. The Tax Counsel Office decided that:
▪ the concerns that Company A raised about the handling of this dispute by CCS is not supported by the evidence. In any event, as stated by the High Court in Dandelion Investments v CIR, the proper course for challenging the assessments is not to attack the method by which the Commissioner made them but to provide the Taxation Review Authority (TRA) or court with the evidence and arguments necessary for it to deal with the matter in the manner the taxpayer contends;
▪ company A did not buy and sell the flights in its own right. It sold the flights on behalf of the airlines as an agent;
▪ the conclusion that Company A did not buy and sell the flights in its own right makes it unnecessary to consider whether the supply of the flights was zerorated international carriage;
▪ company A is not entitled to the input tax deductions it claimed;
▪ company A’s GST registration should be cancelled from the date it was GST registered;
▪ company A has not shown that it is entitled to be GST registered as a nonresident supplier.
Source: govt.nz
