Fearing he was about to be shot, the officer then fired a volley, the report says. Mr Kelly-Tumarae remained standing and, believing the man had not been struck, the officer fired a second round of shots.
Mr Kelly-Tumarae fell to the ground, and was rushed by ambulance to Hawke's Bay Hospital in Hastings, where, the report says, he died soon afterwards.
Investigations revealed the officer fired 14 shots, four wounding the man and another appearing to have passed through Mr Kelly-Tumarae's clothing without causing injury.
The other nine bullets did not not appear to have hit the man or his clothing.
Releasing the report, Authority chairman Judge Sir David Carruthers said a "very thorough investigation" found that the officer, whose identity is not being revealed, "genuinely believed his life was under immediate threat," followed procedures and was justified in his actions.
But there were other aspects of the Police response that did not comply with policies or standards of good practice.
Sir David said Police responded to what was a fast paced and quickly evolving situation.
"The Authority found the Police response was in many respects exactly as it should have been," he said. "The officers involved were justified in carrying out the pursuit and followed Police policy."
He said officers were justified in arming themselves during the pursuit, with the exception of one officer who was not certified to carry a Police firearm and who, in doing so, breached Police policy. It was was not the officer who fired the shots.
The chairman said the officer who shot Mr Kelly-Tumarae intended to incapacitate an armed offender and so remove a threat to the policeman's own life.
"Having decided to use his pistol, he continued to fire until he perceived that the immediate threat to his life had passed," Sir David said. "In those circumstances the force used was justified."
The Authority noted "room for improvement" in respect of Police communication with Mr Kelly-Tumarae's family following the shooting and during the Police criminal investigation, particularly in respect of their failure to explain the numerous holes in Mr Kelly-Tumarae's clothing at the time it was returned to the family in December 2011.
But it pointed out it was Mr Kelly-Tumarae who initiated this incident by pointing a firearm at Police officers.
Police had no option but to follow him so he could be safely contained, and responding to armed offenders is one of the "unavoidable hazards" of Police work, the Authority said.
"The officers who were called on to respond to Mr Kelly-Tumarae were willing to put their lives in danger in order to carry out their duty," Sir David said.
The Authority has made a number of recommendations to Police following this incident including amendments to Police policy around the use and carrying of firearms.
Examining some of the background, the Authority learned that Mr Kelly-Tumarae, having consumed alcohol and cannabis the night before, left his grandmother's home in Flaxmere with her car and his deceased grandfather's shotgun and cartridges.
Two Police officers driving on routine patrol saw Mr Kelly-Tumarae crouching down beside a car, and when they stopped to see what was happening Mr Kelly-Tumarae approached the patrol car and pointed the shotgun at them.
The officers sped away, informed the Police Central Communications Centre and the pursuit began as Mr Kelly-Tumarae drove off.