Guide for completing NOR for GST dispute about taxable activity

Here are some suggested entries you might make in a Notice of response (NOR) - R771 form for this type of dispute. These are a guide only and if your circumstances are similar to the scenario, you will need to provide specific evidence to support your view.

Scenario

You’re registered for GST and have claimed GST input tax deductions.

We’ve issued you with a Notice of proposed adjustment (NOPA) proposing to disallow the input tax deductions because you do not have a taxable activity.

You now want to issue a NOR disputing our NOPA.

Generally, you have 2 months to file your NOR from the date that our NOPA is issued.

Suggested entries in the NOR

What is the change you want? 

Describe the change you want to any amounts on our NOPA. For example, if our NOPA proposes to disallow your input tax deductions, you might say, 'I agree that $2,400 of inputs were not for my taxable activity but the rest of the expenses were for my taxable activity'. Alternatively, if you think the amount you provided on your GST return was correct then you can just refer to your return (eg 'Refer to GST return for the period ended 31/03/2022').

What facts support the change you want?

Describe the facts and circumstances that support your view that one or more of the proposed changes in our NOPA are wrong. Include any important facts you think we’re missing. If you disagree with our view of the facts then explain how we’re wrong.

If the facts you’re relying on have already been stated in our NOPA, you can say something like 'I am relying on the facts set out in Inland Revenue’s NOPA'. If you have more facts you would like to add you could also say '…with the addition of the following facts…' and then add the additional facts. Relevant facts might include:

1. The nature of your activity. For example, 'I buy and sell land'.
2. When the activity started.
3. What you do as part of this activity. For example, 'I researched the development potential of land, raised finance, entered negotiations to purchase land, purchased land, subdivided and developed land, and marketed and sold land.'.
4. How often you do things as part of your activity. For example, 'I worked on the activity 5 hours a week for 2 years doing things like dealing with contractors.'

Why do you think your view is correct?

Explain why you think your view is correct. You'll need to provide details of the law you are relying on to support your view. If you can’t do this, then you’ll need to provide enough detail so we can identify any relevant legislative provisions for you. You’ll also need to explain how the law applies to the facts. If you disagree with our view of the law then explain how we’re wrong. Relevant law may include:

1. The definition of 'taxable activity' in s 6 of the Goods and Services Tax Act 1985. A 'taxable activity' is an activity that is carried on continuously or regularly, and involves or is intended to involve the supply of goods or services to another person for consideration.
2. Court cases that have interpreted the meaning of taxable activity. For example, Newman v CIR (1994) 16 NZTC 11,229 (HC).

Some or all of the law may have already been included in our NOPA. If so, you can say something like 'I am relying on the law set out in Inland Revenue’s NOPA with the addition of …'. Then you might also say:

1. I had an activity. The activity was the buying and selling of land. The attached correspondence with my bank and a surveyor are evidence that this was my intention when I bought the land. I subdivided and developed the land. See attached subdivision consent and invoices from contractors for work completed to the land. I subsequently sold sections of the land in September and November of 2021.
2. I carried on the activity continuously. I spent approximately 2 years on this project. This involved on average 5 hours of my time each week.
3. The activity involved the supply of goods to another person for consideration. I sold the subdivided sections as planned to various purchasers. I received $750,000 for the sales. I have attached copies of the Sale and Purchase Agreements and the settlement statements from my lawyer.

I carried on a taxable activity because:

1. I had an activity. The activity was the buying and selling of land. The attached correspondence with my bank and a surveyor are evidence that this was my intention when I bought the land. I subdivided and developed the land. See attached subdivision consent and invoices from contractors for work completed to the land. I subsequently sold sections of the land in September and November of 2021.
2. I carried on the activity continuously. I spent approximately 2 years on this project. This involved on average 5 hours of my time each week.
3. The activity involved the supply of goods to another person for consideration. I sold the subdivided sections as planned to various purchasers. I received $750,000 for the sales. I have attached copies of the Sale and Purchase Agreements and the settlement statements from my lawyer.

List the documents you’ve attached

In tax disputes you have the responsibility to prove the changes proposed in our NOPA are wrong. Attach copies of documents you’re aware of that are relevant to the issues you’ve raised. List the documents you’ve attached. Documents that might be helpful include:

1. Tax invoices, financial accounts and bank statements..
2. Entity information. For example, Companies Office records for a company.
3. Agreements. For example, the Sale and Purchase Agreement for the land.
4. Correspondence about your activity. For example, a note from your bank recording a meeting where you discussed the nature of your activity.
5. Emails with customers and suppliers.