Commissioner of Inland Revenue V Banks [1978] 2 NZLR 472 (CA)

This case study examines the issue of claiming expenses for using a house for work purposes. The taxpayer, who works as a chartered accountant and part-time tutor, used his dining room as his office. The case discusses the rules related to income tax and depreciation of the house, and the application of relevant judgments. The conclusion states that the taxpayer is entitled to claim depreciation for using the property for both private and business purposes.

LAW CASE

Table of Contents
ISSUE..............................................................................................................................................3
RULES.............................................................................................................................................3
APPLICATION...............................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

ISSUE
In the case of Commissioner of Inland Revenue V Banks [1978] 2 NZLR 472 (CA) th
issue arises in respective of claiming expenses in relation to using the lights, repairs, heating,
insurance and depreciation of the house. In this the taxpayer works in banks as the charted
accountant and also engages in part time job as tutor in polytechnic and deliver lectures. As due
to not providing the accurate work place by polytechnic, taxpayer uses his dinning room as his
office and used for six to eight hours per week for committing work. The CIR disallowed the
deduction regarding such expenditure amount.
RULES
In respective of New Zealand Income Tax Act, 2007 the main purpose is to impose taxes
on net income of the current year and not attaining to the income which is to be incurred in case
of insolvency in company or any income before it is earned (Wolters Kluwer, 2015). In case of
matter related to depreciation of house it can be determined between the expenditure and revenue
earned (Cassidy, 2017). It is calculated on accrual bases. As depreciation can also be given for
both private and income earning purpose.
APPLICATION
In case of CIR v Europa Oil (NZ) Ltd [1971] NZLR 641 and Cecil Bros Pty Ltd v FCT
(1962-64) 111 CLR 430, the judges present their reviews on the bases of not agreeing with the
terms regarding making payment in respect of depreciation. No person can use the property for
private and income earning at the same time (Prebble & McIntosh, 2015). This judgement is
relevant to the stated case study in which the judgement is to be raised by tax payer regarding
getting payment for the expenses incurred (Littlewood, 2016).
CONCLUSION
From the above stated report it is concluded that the judges are agree with that statement
regarding allowing the depreciation in respect of generating income and expenditure incurred. As
the property is used for private and business purpose and also they bear expense in respect of
lighting and heating cots. In such perspective under the New Zealand Income Tax Act, 2007, the
taxpayer is liable to get deprecation amount which thy claims regarding using such property for
private and personal use.

REFERENCES
Books and Journals
Cassidy, J. (2017). The International Tax Implications of New Zealand Taxation of Real
Property Owned by Non-residents (Offshore Persons). New Zealand Law Review, 2017(2).
235-255.
Littlewood, M. (2016). THE SUPREME COURT’S TAX CASES, 2004-2014. Available at
SSRN 2761999.
Prebble, J., & McIntosh, H. (2015). Predication: The test for tax avoidance in New Zealand from
Newton to Ben Nevis. Victoria U. Wellington L. Rev. 46. 1011.
Online
Wolters Kluwer. 2015. [Online]. Available through:
<https://books.wolterskluwer.co.nz/items/10076051-0001S>