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Commissioner of Inland Revenue v Wheeler (1999) 

This case was related to non-filing of tax returns. The taxpayer was penalised for non-filing and the commissioner was not happy with the amount of fine. Thus commissioner appealed in the high court. In the high court no change was made to amount of fine, and it was found amount of fine was adequate for the non-filing of tax return.

Facts of the case

Facts: This is the case between the Commissioner and the husband and wife (taxpayers) involved in a partnership arrangement. The taxpayers had been prosecuted for not furnishing returns for the 1990-1992 income years for both personal and partnership returns. They repeated the problem of non-filing again in 1995-1997 financial years. They went to Court and pleaded guilty again. They were fine of $1550 each plus $250 court costs. The Commissioner was not happy with the amount and appealed to High Court.


The taxpayer had pleaded guilty for their offence of not furnishing returns to the IRD for the period 1995-1997. Each of the two taxpayers was fined a total of $1550 plus $250 court costs. The Commissioner found the fines were manifestly inadequate and appealed to the Court.

Tax Law

Section 15(B) of the Tax Administration Act 1994: Taxpayer’s tax obligations

Section 33(1) Returns of income

Section 37 of the Tax Administration Act 1994: Dates by which annual returns to be furnished

Section 92(1) Taxpayer assessment of income tax. 

Commissioner’s argument

Commissioner’s arguments were based on the following points:

  • The taxpayers were second offenders.
  • In the first offence, they did not file returns for 3 years from 1990 to 1992 and they continued their offence for 3 more years from 1995 to 1997. The length of period was considered as significant.
  • They had been given friendly warning from the Commissioner.
  • No evidence of special circumstances such as illness.
  • No evidence of culpability of other parties such as accountant.
  • Those returns were related to a commercial operation.
  • The fines were strong for a single household unit
  • The taxpayers had a poor business management.
  • The parties were involved in many different business such as network marketing, farm contracting.
  • Low disposable income and the wife was pregnant.
  • Have a better system to move forward.

Thus, the Commissioner claimed that the fines were manifestly inadequate.

Court’s decision

The Court agreed to the claims from both parties.  Moreover, the Court also claimed that the failures of filing tax were not intended to avoid payment of tax.

To determine the penalty amount, the Court stated that “It is reasonable to consider the impact of the total penalties”. As determined in Denver Videotronics Ltd v IRD (1986) 8 NZTC 5,163, “However, in a case involving this number of offences and convictions, it is of course very important that the sentencing Court should have regard to the totalityofthe offending and also to the totality and effectofthe penalty imposed. In other words it is not only a matteroffixing an amount per offence, but at the end one has to stand back, consider the total effectofthe sentencing and have regard to whether in the final result that achieves broad fairness”. Because the taxpayers belongs to “single household”, the total penalties was manifestly adequate.

Thus, the appeals were dismissed. 


Commissioner of Inland Revenue v Wheeler (1999) 19 NZTC 15,183