More on TUIA union tax write off

A reader emails about my post on Sunday covering some shonky accounting at TUIA union.

Some comment on the TUIA tax write off.  There are three possible ways TUIA got the write off they received.

  1. Staff incompetence on IRD’s part;
  2. misleading conduct by TUIA; or
  3. A combination of 1 and 2.

I am guessing a combination of 1 and 2 and I will explain why.

The Tax Administration Act sets out IRD’s duties and provides for the circumstances where a write off can occur.

The Inland Revenue Commissioner (and all his staff) has a duty to uphold the integrity of the tax system and a duty to collect the highest net revenue practical.

Its pretty simple when you consider both these duties – if you owe tax and you have the means to pay you need to pay. If you don’t have the means to pay you may get relief.  If you undermine the integrity of the tax system (decide not to pay tax, engage in tax avoidance) you will still have to pay but the mercy may not be there if you can’t pay. In these circumstances rather than provide relief through a write off it may be considered more appropriate to bankrupt or liquidate and also consider some criminal sanctions.  

The Tax Administration Act does provide for tax write off in the right circumstances.  But in considering write off Inland Revenue still has to maximise recovery.  There are two broad criteria for write off:

1.  Serious hardship; and

2.  Maximum recovered

Serious hardship only applies to individuals.  One exception is where enforcing debt against a company will cause an individual to be placed into serious hardship. Serious hardship cannot apply to TUIA.  It is an organisation based on membership not some one man company that if forced to pay debt could place its director into hardship.

Maximum recovered is simple.  A taxpayer owes $100k they have assets of $50k, you get them to pay something in the region of $50k.  You cant get blood out of a stone.

Going by what the Owl has provided and considering the above TUIA were required to pay all of the outstanding tax.  As I said above my guess as to why tax was written off is that this is a combination of staff incompetence and TUIA deceit.  Lets give a little credit to Inland Revenue staff, they start from a position that total tax owing should be paid.  However, in the right circumstances it might not take much for TUIA to convince IRD that some or all of the tax should be written off.  A few lies, a bit of deceit and voila. Public servants default to the easy answers and take the path of least resistance all the time – write off is easier than enforcing debt.

Thank god the Tax Administration Act does provides for write offs to be reversed if the decision was made on misleading information.

So what to do?

The thing that really ticks me off about this is that the greatest advocates for progressive tax and use of taxes to provide social support are unions.  You would think they would voluntarily honour their duty to pay tax, set an example for others .  From a moral point of view TUIA should have been committed to paying the tax rather than seeking a write off.  How many public hospital operations does $118k cover? What resources could it provide a decile 1 school? etc etc etc. They should just fess up and pay up.  If they refuse to pay up then a complaint should go to the Inland Revenue Commissioner complaining that they have misled Inland Revenue and that the write off should be reversed and the tax collected.

Maybe we will see the result in next year’s financial statements if someone is prepared to write to TUIA and convince them to pay or complain to Inland Revenue to force Inland Revenue to comply with the law.

Maybe you can put it to the Army to take up?

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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.