Time Bars on Reassessment of Tax Returns
Grange Associates Ltd - 27 September 2012
The IRD’s power to issue amended assessments increasing the liability
of a taxpayer is subject to a four year time limit, known as a time bar.
Generally, the time bar begins four years from the end of the income
year in which the return was filed. For example, an income tax return for the year ended 31 March 2012,
filed before 31 March 2013 will become time barred on 31 March 2017 (four years after 31 March
As you can see, time bars do not apply until after the return is
filed, not four years from the income year of the return. So if a return is not filed, no time bar can
begin to apply to it until it is. So the more prompt you are in filing returns, the sooner these
returns will become time barred and therefore not subject to IRD reassessment and further tax
As an example, a taxpayer files their 31 March 2007 income tax return
late on 31 March 2011. If they had filed it on time (prior to 31 March 2008) the return would have
become time barred on 31 March 2012. Since it was filed late, the time bar will not come into effect
until 31 March 2015.
Non Standard Balance Date
In the case of a non standard balance date, the time bar begins on 1 April after the tax return is filed. For
example, a company with a balance date of 30 September 2011 files their income tax return on 20 January 2012, the
time bar will start from 1 April 2012 and the return would become time barred on 31 March
GST Returns are also time barred beginning four years from the end of the GST return period in which the
GST return was filed. For example, a company files its two-monthly GST return for the period ending 31 July
2012 on 28 August 2012. The return will become time barred on 30 September 2016 (four years from the end of
the 30 September 2012 period in which the return was filed).
Exclusions to Time Bars
Time bars will not apply if the return is considered fraudulent or
misleading or the return omits income of a particular nature or from a particular source. So, although
it is important to file returns promptly, it is also necessary to ensure returns are comprehensive and
complete before filing.
All information is correct at the date of article
publication. Please note we provide the information as a service only. Accordingly, the contents are
not intended as a substitute for specific professional advice and should not be relied upon for that
Back | Print this page