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Double Taxation of ACC Payments? - April 2010

#1 User is offline   Remedy 

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Posted 18 April 2011 - 09:49 PM

http://www.mikelennard.com/?t=40 ?
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#2 User is offline   firecat 

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Posted 19 May 2011 - 08:38 PM

View PostRemedy, on 18 April 2011 - 09:49 PM, said:



Sent documents to Mr Lennard stating I did not agree with his article, in terms of benefit debt in respect of the crowns loss this is always based on the SSA 1964 Schedule rates (the amounts actually paid to the individuals)this being in line with the case principle of DSW v Allan (AP 17/93)which is that your liability should be for the net debt as the crown always retains the tax. This is why the judgment of Hansen J in Buis v ACC (CIV 2007 404 004703, 06/03/09) makes no logical sense in terms of benefit debt recovery, he decided that because s.83A (1) to (4) SSA 1964 which legitimized retrospectively to 1st October 1986, (re the 2005 amendment), the administrative practice of "grossing up" benefit rates, and ACC must return the "excess benefit" then this must be the gross benefit debt. Then he says that the bar on WINZ recovering the benefit tax as part of the crown debt only applies if WINZ are recovering the debt themselves.It is the case that the debt is between WINZ and the debtor, not ACC who only have a responsive roll in returning your debt, why would it be that you should return to WINZ more than the debt established under s.86 SSA 1964?
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#3 User is offline   MINI 

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Posted 20 May 2011 - 10:24 AM

View Postfirecat, on 19 May 2011 - 08:38 PM, said:

Sent documents to Mr Lennard stating I did not agree with his article, in terms of benefit debt in respect of the crowns loss this is always based on the SSA 1964 Schedule rates (the amounts actually paid to the individuals)this being in line with the case principle of DSW v Allan (AP 17/93)which is that your liability should be for the net debt as the crown always retains the tax. This is why the judgment of Hansen J in Buis v ACC (CIV 2007 404 004703, 06/03/09) makes no logical sense in terms of benefit debt recovery, he decided that because s.83A (1) to (4) SSA 1964 which legitimized retrospectively to 1st October 1986, (re the 2005 amendment), the administrative practice of "grossing up" benefit rates, and ACC must return the "excess benefit" then this must be the gross benefit debt. Then he says that the bar on WINZ recovering the benefit tax as part of the crown debt only applies if WINZ are recovering the debt themselves.It is the case that the debt is between WINZ and the debtor, not ACC who only have a responsive roll in returning your debt, why would it be that you should return to WINZ more than the debt established under s.86 SSA 1964?


All Claimants MUST be aware that there is usually three different tax issues in the reimbursing of WINZ and backdating of unpaid weekly compensation.

1/ The first is the one that has attracted the name of 'double taxation', that is tax on the reimbursement from ACC to WINZ on the taxable part of the benefit claimed by the claimed to keep themselves afloat while they are awaiting the outcome of the claim to weekly compensation (no matter what the reason they are not getting it)!!

2/ The second is the taxing of the non-taxable benefit from WINZ they collected for disability, rental or mortgage assistance or other untaxed benefit.

3/ The third is the backdated weekly compensation being taxed in the one year, making the overpayment of tax in the one year huge.

Only one of these cases in the article quoted actually says anything about the non-taxable benefit and the taxing of the back dated weekly compensation all in one year.

That is the Hollis v CIR (2010) 24 NZTC 23,967. It is also the only one taken to the Tax Reveue authority.

HOWEVER what the writer of this article has missed is the fact that the case went onto the High Court and it has been listed up here a number of times. (Like when the dog wants to name Mini).

No one should ever use the words 'Double taxing' when trying to unravel the many many problems associated with these three methods of taxing payments. They should always use the phrase, 'overtaxing' that is because double taxing is exactly that 'twice' the amount of tax, whereas, overtaxing, can be by any amount.

The other cases involved have made a big mistake by using the phrase "double taxing" This makes it terribly difficult for anyone coming up behind them to counter that claim. Two H/C Judgesdge which has not done that is the one in the Hollis case, which is not noted in the article quoted. Only the TRA case has been noted.

Anyone out there thinking of doing anything regarding the 'overtaxing of the backdated weekly compensation', can ask me questions if the have a good tax lawyer working for them.

Mike Lennard is being a IRD helper by writing this article in such a limited way.

Mini
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#4 User is offline   firecat 

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Posted 20 May 2011 - 11:40 PM

Documents obtained post the Buis judgment (which ACC should have made available under discovery)showed that from 1st October 1986 until July 1994 WINZ were establishing debt at the gross amount. However once the debt was returned the debtor could claim a credit from IRD for the benefit PAYE, the problem is that for whatever reason ACC claimants were not given the credit, because once things changed to a net recovery policy following DSW v Allan, WINZ returned a credit to ACC for the benefit PAYE refunded to them over the previous 8 years.

When asked what they did with the credit, ACC advised that they paid the lot to the Crown Revenue account

Now I would have though that money overpaid as a debt to the crown should be returned to the claimant,WINZ had accepted that they could not legally accept the gross debt so they returned it to the payer ACC. Should not that money then retain the character of the payment when first paid in error, another words, gross weekly compensation?
ACC in treating with claimant weekly entitlement must follow their own Act? How did Revenue even accept the money, it cannot have been tax for benefit?
For the next 5 years until March 1999 after ACC also complied with the net reimbursement policy post Allen, weekly compensation was first taxed at the extra emolument rate of 40.2% depending on the arrears figure, and the net benefit debt was deducted from the after tax arrears, in effect taxing the debt refund, note their did not seem to be the need to return benefit tax during this period.
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#5 User is offline   MINI 

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Posted 21 May 2011 - 10:35 AM

View Postfirecat, on 20 May 2011 - 11:40 PM, said:

Documents obtained post the Buis judgment (which ACC should have made available under discovery)showed that from 1st October 1986 until July 1994 WINZ were establishing debt at the gross amount. However once the debt was returned the debtor could claim a credit from IRD for the benefit PAYE, the problem is that for whatever reason ACC claimants were not given the credit, because once things changed to a net recovery policy following DSW v Allan, WINZ returned a credit to ACC for the benefit PAYE refunded to them over the previous 8 years.

When asked what they did with the credit, ACC advised that they paid the lot to the Crown Revenue account

Now I would have though that money overpaid as a debt to the crown should be returned to the claimant,WINZ had accepted that they could not legally accept the gross debt so they returned it to the payer ACC. Should not that money then retain the character of the payment when first paid in error, another words, gross weekly compensation?
ACC in treating with claimant weekly entitlement must follow their own Act? How did Revenue even accept the money, it cannot have been tax for benefit?
For the next 5 years until March 1999 after ACC also complied with the net reimbursement policy post Allen, weekly compensation was first taxed at the extra emolument rate of 40.2% depending on the arrears figure, and the net benefit debt was deducted from the after tax arrears, in effect taxing the debt refund, note their did not seem to be the need to return benefit tax during this period.


Hi Firecat

Glad you could find this most important of threads, tucked away at the end of all the achrived stuff, so soon after being posted.

Everybody needs to see how there are those of us out here grinding away so hard at our own expense, trying to get back some of the money wrongfully Kept/taken away from us. Even the omnbudsmen have made public their concern that the backdated monies are taxed at such a high level.

My slant on your very deep research is that not only are ACC not acting correctly in the manner of a employer under the ACC Act as they are supposed too, re: PAYE but, also the 1994 Tax Act at section CC1 says quite clearly that "The gross income of any person includes- not being a payment (ii) In respect of which an amount equal to those payments is refunded to the chief exectutive of the depart for the time being responsible for the administration of the department for the time being responsible for the administration of the Social security Act 1964 by the Accident Compensation Corporation under sect 88(3) of that Act:"

That is the reverse of how ACC treat the 'taxable' and 'non-taxable' part of the reimbursement to WINZ in the case of claimants repaying WINZ.

Concerning the taxing of all income in one year for the backdated weekly compensation the Ombudsmans report to parliament for the 2009/10 year, the following not appears at page 26:

"In 2009/10 we dealt with two cases that raised the issue of tax on lump sum payments made by ACC. This issue has arisen on a number of occasions in the past. It seems unfair that recipients of lump sum payments have to pay tax on those payments in the year of receipt,when the lump sums relate to back payments extending over two or more years. This means they are taxed at the highest maginal tax rate, whereas if they could spread the lump sum over the tax years to which the payments relate, then in most cases the incidence of tax would be lower. The unfortunate tax consequesnces for a claimant in these circumstances have been ackowledged by the Taxation Review Authority and the Accident Compensation Appeal Authority. We understand that ACC has raised the issue with its Minister and await with interest his consideration of the matter".[/i]
Someone out there may like to ask Mr Nick Smith what he intends doing about this matter of 'overtaxing'??.
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Now their budget has been cut I will not hold my breathe on any of the issues being straighted out in the claimants favour as it will cost the ACC and/or the IRD Mega-bucks.

It is obvious that the Ombudsman has not considered the High Court case of Hollis v Commissioner, as he has only mentioned the Tax Review authority, which is the lower of the Tax Courts.

Mind you the writers of the Law brief which the ombudsmans quote is taken from appears to thing that it needs a change of law to right this horrific wrong. I am not yet persuaded that this is correct, as there is law already available that allows the Commissioner to right this wrong at their liesure.

I consider it is just a money making racket for the Crown entities involved and this gives the ACC more of a reason to willy nilly cut people off their rights to cover, w/c, and other entitlements. Becuase at the end of the day when the claimant obtains their right to weekly compensation it is 'overtaxed' at such a huge amount, it makes it a very safe way for the Crown to rake in money for their coffers, from people that can hardly afford it, with the disabilities they have to injure. Not to mention the fact they have little money to keep feeding lawyers continually.

Keep on keeping on the big fight,

Mini
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#6 User is offline   Tomcat 

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Posted 17 October 2012 - 03:17 PM

bump ???
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