Tax can be recovered by the commissioner even if an appeal is pending.

Effect on other court orders

If there is a genuine dispute as to liability, a court may decide not to make orders against a taxpayer in another matter that would prejudice their position before the appeal is decided. For example, the court is unlikely to grant a bankruptcy petition (or application for a winding- up order in the case of a company) until a dispute about tax liability is settled.

Part-payment while an appeal is pending

If an assessment is disputed, the commissioner will agree not to take recovery action while the matter is being decided provided the taxpayer pays a substantial part, usually 50%, of the disputed amount (Schedule 1 ss.255-10). This is refundable, with interest, if the taxpayer succeeds. If the taxpayer does not succeed, additional tax at 20% per year is payable on the sum remaining.

The commissioner’s power to remit the additional tax is restricted, in effect, to situations beyond the taxpayer’s control.

If the taxpayer is not prepared to make an offer to pay 50% of the amount in dispute, the commissioner is likely to commence recovery action (ruling IT 2101).