Taxation

A Little elephant in the room – Part 3

Where were we? That’s right, it had just been established that the Council of Trade Unions via then-head Helen Kelly had issued a “please explain” to Unite Union and Matt McCarten. But it is McCarten’s response to Dominion-Post journalist Rebecca Stevenson that is the most enlightening:

Unite head Matt McCarten confirmed yesterday that the union owed money to the IRD but said he had made choices to pay for union campaigns rather than clear the debt. “I don’t shy away from these decisions, I make the calls.”

So Matt McCarten, is now Chief of Staff for the Leader of the Labour Party, fellow former union boss Andrew Little. But some time around the time of the 2008 General Election, McCarten made a conscious decision not to pass on PAYE deducted from Unite Union staff to the IRD as he is legally required to do.    Read more »

A Little elephant in the room – Part 2

So it’s been established that Andrew Little, leader of the Labour Party doesn’t like people who evade paying tax. So why does he employ one as his Chief of Staff?

That’s a pretty fair question, don’t you think? It’s probably one that David Cunliffe should have considered before he hired Matt McCarten in 2014 and set up the infamous War Room. And it’s certainly something Andrew Little should have considered before he went full retard on John Key over the last two weeks, and before he made a factually incorrect attack on John Shewan.

Matt McCarten and Unite Union’s tax issues first became a public issue in 2010. Rebecca Steven reported this in Stuff on 2 December 2010:

One of New Zealand’s largest unions, Unite, owes IRD over $130,000 including over $36,000 in tax meant to be paid on behalf of its employees.

The union’s accounts, which can be publicly viewed through a Government website, shows Unite’s liabilities exceeded its assets by over $170,000 for the year ended March 2009.

A further $57,630 is owed to the Government tax collector for GST.

Unite head Matt McCarten admitted to BusinessDay this afternoon that the union owed money to IRD and said the union was “keen” to pay.

He said it was “not that much in the great scheme of things”.

PAYE stands for pay-as-you-earn. This money is collected from employees by employers and then paid to the IRD.

Right-wing blogger David Farrar said on his Kiwiblog this was a very bad look for a trade union as it meant Unite had been collecting the tax but not paying it.   

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Hang on a minute? Now we have to follow some moral code? What about the law? Doesn’t that matter anymore?

Labour have pounced on some rather silly statements by the Prime Minister.

Labour’s finance spokesperson Grant Robertson is calling for John Key to “take a firm stand and demand a law change” following the prime minister admitting small taxes on multinational companies is unfair.

“Multinationals should pay their fair share of tax – not just about what’s legally right but also what’s ethically right,” said Mr Key on The Nation yesterday.

“To fix that situation I think you need all of the countries working together.”

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Has the government shot itself in the foot with its “Bright-line” test?

I have come across something that more suitably qualified people might like to comment on. I think the government has created a “vote-losing” law inadvertently.

It is this new “Bright-line” law regarding housing sales.

I was talking to a chartered accountant and lawyer about it the other day.  It appears the government may have inadvertently created a problem whereby ANYONE making even a slight change to a trust is going to end up triggering a tax situation even though no real sale happens or money is involved.

The relevant law is Section GB 53 of the Income Tax Act 2007, below. The problem word is effect in 1(c) [underlined].

Section GB 53 says:

GB 53 Arrangements involving residential land: trusts

When this section applies

(1) This section applies when—

(a) the trustees of a trust own residential land directly or indirectly (trust residential land); and

(b) trust residential land makes up 50% or more, by market value, of the assets of the trust; and

(c) the trust’s trust deed changes, a decision-maker under the trust deed changes, or an arrangement under the trust changes, with a purpose or effect of defeating the intent and application of section CB 6A (Disposal within 2 years: bright-line test for residential land).   Read more »

Trotter on Labour’s education policy

Chris Trotter doesn’t seem too enamoured with Labour’s education policy.

THERE’S A HOLE in Labour’s emerging policy framework – through which too little light is getting in. The party’s latest big announcement: three years of free post-school education; is a case in point. As a headline, it’s fantastic. But, Labour supporters’ euphoria is unlikely to survive the policy’s fine print. Nearly a decade will pass before the plan is fully implemented – but only if  Labour wins the 2017, 2020 and 2023 elections on the trot. It’s not quite a case of  giving something with one hand, only to snatch it back with the other – but it’s close.

And why is Labour unwilling to offer three years of free tertiary level education in its first budget? Because it’s not yet ready to adopt a social-democratic fiscal policy to pay for its social-democratic education policy. That’s the hole – and it’s a bloody dangerous one!

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New bill needed to enforce a law we already have?

We already have a law that says you have to pay tax on any income derived from commercial or investment interest.

So the law isn’t the problem.

As usual with this country, it’s enforcement.

The Government has introduced a bill designed to make sure people who buy and sell property pay tax on their gains.

Current tax law says they should but it’s been difficult to enforce.

The Government has previously announced its intention to tighten the rules.

The new bill will set up a “bright-line” test, which makes it clear all property buyers, including overseas buyers, who buy and sell a residential property within two years will be taxed on their gains.    Read more »

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Time to shoot the Sherriff – A Special Investigation Ctd

grant thornton

by Stephen Cook

A LEADING accountancy firm has been implicated in an alleged plot to swindle hundreds of thousands of dollars from Inland Revenue.

Liquidators from Grant Thornton, which boasts annual worldwide earnings of $4.7 billion and has been acclaimed as one of the best managed international firms, are among those under investigation by IRD and the Serious Fraud Office for their part in an alleged conspiracy to rip off the taxman.

IRD has invoked wide-ranging powers under section six of the Tax Administration Act to investigate experienced liquidators Greg Sherriff and Tim Downes and their handling of what should have been a relatively simple company liquidation back in 2013.

Two years on the case is attracting plenty of attention with claims liquidators in conjunction with an Auckland law firm systematically robbed the company blind and withheld money that should have gone to the taxman.

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IRD bribery & fraud scandal: A Special Investigation, Ctd

inland-revenue-website-address

by Stephen Cook

INLAND REVENUE is officially investigating the actions of those implicated in a messy bribery scandal currently threatening the integrity of the New Zealand taxation system.

Top-level discussions were held in Auckland yesterday between senior IRD investigators and a number of complainants over the alleged criminal conduct of those involved in what appears to be an elaborate plot to defraud taxpayers out of millions of dollars.

But more importantly, at stake is the integrity of the taxation system and the right of all taxpayers to have their liability determined “fairly, impartially and according to law”.

If IRD were to ignore the allegations, it could open itself up to potentially billions of dollars worth of claims from aggrieved taxpayers wanting the same preferential treatment enjoyed by the company at the centre of the latest scandal.

The company had tax liabilities of close to $300,000 but successfully negotiated a final settlement of $30,000.  Read more »

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Corruption, bribes and two IRD officials – A Special Investigation

by Stephen Cook

CORRUPTION ALLEGATIONS have been levelled against two rogue Inland Revenue staff involved in investigating the tax affairs of an Auckland company at the centre of a messy bribery scandal.

The department is refusing to confirm or deny claims the two forensic investigators were part of an elaborate plot to defraud the taxman out of nearly $200,000.

The bribery allegations form part of the murky backdrop to a complex web of betrayal and deception implicating liquidators, an Auckland lawyer, the two IRD staff along with another man, who for legal reasons cannot be named.

Whaleoil understands complaints have now been filed with the Police, IRD and the Law Society over the actions of various parties involved in the scandal.

An IRD spokesman said due to taxpayer secrecy provisions in the Tax Administration Act it was unable to comment “on matters relating to the tax affairs of individuals, organisations or businesses”.

Even in cases involving Inland Revenue and high-profile customers, the department could not comment on a customer’s affairs, the spokesperson said.

The comments do nothing to shed any light on claims two staff conspired with an Auckland man posing as a lawyer to rip off the tax department to the tune of almost $200,000.    Read more »

Quote of the Day

Today’s quote of the day is from The Donald:

Trump did not say what percentage of his income he pays in taxes, and was open about the efforts he makes to keep his rates low.

“I fight like hell to pay as little as possible for two reasons,” Trump said. “Number one, I’m a businessman. And that’s the way you’re supposed to do it. And you put the money back into your company and employees and all of that. But the other reason is that I hate the way our government spends our taxes. I hate the way they waste our money. Trillions and trillions of dollars of waste and abuse. And I hate it.”

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