Taxpayer Denied GST Zero-Rating, Input Deductions; Liable for Shortfall Penalties: TCO Decision

• The Taxpayer claimed involvement in freight-forwarding and acting as an agent for overseas customers.
• The activity was small with few transactions and insufficient invoices as evidence.
• The Taxpayer was GST registered on a payments basis, returning zero-rated sales and claiming input tax deductions.
• Customer and Compliance Services questioned the input tax deductions and the existence of a taxable activity.
• The dispute involved whether the Taxpayer could charge GST at 0% and claim input tax deductions.
• The Tax Counsel Office decided the Taxpayer was not entitled to charge GST at 0% or claim input tax deductions.
• The Taxpayer was not carrying on a taxable activity under section 6.
• The Taxpayer was liable for shortfall penalties due to gross carelessness.
• The onus of proof is on the taxpayer to show an assessment is wrong.
• The standard of proof required is the balance of probabilities.
• The Taxpayer did not provide sufficient evidence to prove carrying on a taxable activity.

Source: taxtechnical.ird.govt.nz

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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