The soldier then appealed against this decision at the Court Martial Appeal Court in Wellington last month.
At the hearing, Wills' lawyer Paul Murray argued that at Wills' original hearing mitigating factors, such as Wills' remorse, early guilty plea and his offer to engage in restorative justice,weren't taken into account, as the judge did not believe a starting point could be taken from dismissal.
He said a reduction in rank would have been a more appropriate sentence.
However Major Ben Bateman, who appeared on behalf of the New Zealand Defence Force, said it was not "tolerable or realistic" for Mr Wills to stay in service.
He argued that given Wills' offending, it would not be appropriate for him to have a reduced rank, and said dismissal was the only appropriate sentence.
In a written judgement released by Court Martial Appeal Court judge, Justice Stephen Kos today, Wills' appeal was dismissed.
In the judgement, Justice Kos said it "would not be tolerable" for the Defence Force to retain the services of Wills.
He said the court did not consider it would be realistic for Wills to remain in service at a reduced rank.
"We cannot see reduction in rank being a realistic response, excusing the need for dismissal... the sentence imposed was not excessive. Rather, it was inevitable."