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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 147
consideraon; and includes any such acvity carried on in the form of a business, trade, manufacture, profession,
vocaon, associaon, or club:
…
(2)
Anything done in connecon with the beginning or ending, including a premature ending, of a taxable acvity is treated
as being carried out in the course or furtherance of the taxable acvity.
(3)
Notwithstanding anything in subsecons (1) and (2), for the purposes of this Act the term
taxable acvity
shall not
include, in relaon to any person,—
…
(b)
any engagement, occupaon, or employment under any contract of service or as a
director of a company …
(salary
and wages)
This definion makes GST different from income tax – GST can be imposed in situaons where income tax isn’t
o
For income tax, the taxpayer needs an intenon to make a profit in order to be in business (
Grieve
) – but for
GST, you only need a regular acvity without the intent to make a profit
Therefore, anything done to begin a taxable acvity or end it (e.g. seng up or selling a business) is
included because you were going to intend to connue the taxable acvity
o
A taxable acvity generally includes all businesses and some other acvies that would not be regarded as a
“business” for income tax purposes (e.g. a sporng club or charitable organisaon)
The elements for a taxable acvity are:
o
There must be a
registered person
o
The registered person must
make a supply
o
The supply must be
connuous or regular
o
The supply must be of
goods or services
o
The supply must be
in New Zealand
o
The supply must be
for consideraon
WHAT IS “CONTINUOUS OR REGULAR”?
Newman v Commissioner of Inland Revenue
(1995) 17 NZTC 12,097 (CA)
o
Facts
A builder (who was already GST registered) purchased 2.7 hectares of land to build a family home
The builder built the family home, but fell into financial difficules and instructs a surveyor to prepare
a subdivision plan to divide the land into two lots – it was a straighorward subdivision without any
development work
The builder sold the front secon of the land but did not pay GST to the IRD
o
Judgment
This was not a taxable acvity – therefore, the builder was not liable to pay GST
“Carrying on” denotes habitual pursuit of a course of acon and the repeon of acts – but
there was no repeon of the acvity
This was a one-off transacon which could not be regarded as connuous
It was a mistake for the High Court to look at the sequenal steps in the subdivision as being some
sort of connuous acon
Wakelin v Commissioner of Inland Revenue
(1997) NZTC 13,182 (HC)
o
Facts
A GST registered owner of a factory subdivides a block of land into 6 residenal secons (including
one on which his house is located)
The work took place over 3 years and included water reculaon to two lots, an engineer’s report,
easements for the discharge of storm water, paying roading and reserve contribuons
The taxpayer sold all 6 lots over a 9-year period
The Commissioner wanted GST
o
Judgment
This was a taxable acvity because the supply was connuous and regular
WHAT IS “CONSIDERATION”?
2
Interpretaon
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