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ACC Fails to Pay Self-Employed Levy Payers The Plot Thickens

#1 User is offline   Lupine 

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Posted 04 October 2017 - 10:33 AM

ACC Fails to Implement the Will of Parliament Continued:

In my previous article I promised that I would provide more information how the Accident Compensation Corporation is running unlawful processes that deny levy paying self-employed persons their lawful entitlements under Schedule 1 Clause 38 (2)(a) and Clause 39 (2)(a).

In my previous article I identified how the Corporation has placed a false test on Clause 38 and 39 (2)(a) claimants. The Corporation’s stated position in OIA documents is that the claimant must be in their first year of self-employment which is a position completely at odds with the clear rulings provided in the Bartrom appeals and the wording in Section 169A of the legislation.
In this article I will demonstrate that matters go much deeper than that. Not only does the Corporation rely upon its unlawful first year in self-employment test to defeat entitlement at a macro level, it also relies upon a series of unlawful processes to defeat these claims at an individual level.

The claimants directly affected are self-employed persons who pay Schedular Tax PAYE payments to IRD. IRD treats those Schedular tax payers as PAYE employees. IRD is increasing the types of workers who will be paying Schedular tax, thus creating an ever-increasing number of claimants who will essentially be ripped off by ACC.

Schedular tax payments are unique in that during the period the tax payer is receiving those payments, IRD treat those payments as PAYE. However, at the end of the tax year Schedular PAYE tax payers are entitled to deduct expenses as if those PAYE earnings were received as a self-employed person. Once those expenses are deducted the final earnings are presented as earnings as a self-employed person in what is now the previous financial year when the tax year rolls over on April the 1st.

Essentially the earnings are treated under the PAYE regime in the current tax year so IRD can tax the self-employed as they earn. But as the tax payer is self-employed, unlike the permanent PAYE employee, deductions for expenses can be calculated. Essentially the tax status of the self-employed person required to make Schedular PAYE tax payments is transitional. In the tax year in which the Schedular payments are made the earnings are treated as PAYE that take on the status of earnings received as a self-employed person after expenses have been deducted when the financial year rolls over.

It is here we examine the next unlawful process that the Corporation is conducting. Let us take a claimant who actually is in their first year of self-employment so we can focus on this specific issue. Our claimant started their business on April the 2nd 2017. They were paid a Schedular payment of say $8000 dollars on the 28th of April and then had an accident on April the 29th 2017.

The Date of First Incapacity is strictly interpreted and in this case, is April 29th, 2017. Now as this claimant is in their first year of self-employment it is not possible for the claimant to have any earnings received as a self-employed person under law due to the absence of any previous financial years. This is where the Corporation steps in and implements its next wholly unlawful process.

At the time of the DOFI (Date of First Incapacity) the tax records will show the payment on the 28th of April 2017 as a Schedular PAYE payment. The Tax document will specifically state that those earnings are not considered as earnings received from self-employed income as at this stage IRD are treating the earnings as PAYE so that IRD can tax the self-employed as they earn.

The Corporation alters the tax status of the earnings on the DOFI from earnings received as an employee (PAYE) to earnings received as a self-employed person (Relevant Year). Earnings received as a self-employed person can only be calculated in the previous relevant year but wait. Our claimant is in their first year of self-employment so there can be no previous relevant financial year. This results in the following decision from the Corporation.
ACC has identified you had earnings immediately before incapacity so you are eligible for a calculation under Clause 38. The earnings you received are earnings received as a self-employed person and those earnings can only be calculated in the relevant year. As you have no earnings in the relevant year you are entitled to 80% of Nil. This requires ACC to calculate your entitlement under Clause 42. (More on that later)

To add insult to injury the claimant who has been unlawfully denied entitlement, despite the presence of PAYE schedular payments which have been altered by ACC, will then receive a fat levy bill in the following financial year due to the presence of the PAYE earnings the Corporation has avoided liability on at entitlement level.

If we examine the Corporation’s decision to calculate 80% of Nil earnings it is evident that there is something very wrong. A calculation where zero is divided is a calculation that sits outside of the laws of accounting and mathematics. It is simply not possible to conduct such a calculation and yet here we are where ACC does this as a matter of course. This is the direct result of ACC unlawfully changing the earnings status of the claimant at the DOFI.

When it comes to Clause 42, ACC presents this as a possibility to the claimant and then goes on to claim the claimant was not in full time employment or would not have continued to be in full time self-employment. The Corporation does not concern itself with proof. Corporation staff have proven themselves willing to say anything to achieve this objective. (More on that in my next article)
In summary the Corporation not only has placed the unlawful first year of self-employment test on the process, the Corporation wilfully alters the tax status of the claimant’s earnings from what is recorded at IRD as PAYE earnings on the DOFI to earnings received as self-employed person. Combine these facts with the fact that ACC has no audit process for Clause 38 and 39 (2)(a) claimants and the fact there has been no case law on Clause 38 (2)(a) in twelve years and the picture is very clear.

ACC has implemented procedures to defeat entitlement claims for self-employed schedular tax payers resulting in decisions that do not conform with the laws of mathematics, computing and accounting. Once the claimant has been unlawfully diverted to Clause 42 the Corporation attacks the claimant’s veracity in the absence of proof and in the presence of the willingness of ACC staff to bear false witness against those who cannot defend themselves.

I can now confirm without any doubt that the Corporation’s Executive is very aware of the concerns I have raised. The Executive is comfortable with the processes and have no intention of altering the processes in any way whatsoever. This confirms that the Corporation has always wilfully run those processes, and will continue to do so unless it is stopped.
I will be continuing the battle to hold ACC accountable but the public need to know now. There are more articles to follow.
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#2 User is offline   Alan Thomas 

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Posted 04 October 2017 - 12:04 PM

With regards to your scenario of a claimant having an accident one month after starting business yet paying themselves $8000 per month it is obvious that the company has not yet generated any income from their invoices for the purposes of paying earnings. This means that the $8000 has actually come out of the original investment going into the company. On your previous article there was an individual who proposed that this approach to business/ACC claims would be fraudulent.

However with the limited liability company it is important to recognise that a limited liability company is an entity all on its own and that despite the owner own the company they are an employee of the company and as such are entitled to every benefit of an employee. It becomes totally irrelevant that the company has not yet generated any income as any employee in fact all of the other employees will receive their earnings in the normal way and thus be treated by the ACC as earners from the get go. Quite typically an owner operator registering a company to provide such a number the owner will invest money into the company, draw earnings and pay PAYE but loan the money back into the company so the entire process is simply a book entry process.

If on the other hand the claimant was self-employed in their own right forego actual payment of earnings but leave the money in the company and therefore not be under the umbrella of a limited liability company we then have to look at the value of the activities of the claimant and what earnings were to be expected from the work task activities.

A case that comes to mind regarding the complexities of owner operators is that of Douglas weal versus ACC whereby he went into business with the intention of earnings, went on a honeymoon and conducted some business activities during the course of its honeymoon, had an accident event and claimed earnings compensation based on the previous year of earnings in his previous business which he had closed down a couple of months prior to the accident event. The outcome of this case was in his favour followed by the ACC seeking leave of the court not to pay the earnings compensation until after they have the chance to appeal while at the same time making preparations to prosecute for fraud. Forgetting the subsequent issues the fact remains that he was carrying out work task activities for the purposes of earnings at the time of his accident event without actually generating any income.


As we are living in the land of the free each individual person has the right to control their own self destiny in the manner that they see fit. This includes how an individual conduct their affairs concerning their business activities and the way in which they conduct that business. Under no circumstances can it ever be over to the ACC to reconfigure any business arrangement concocted by the individual. We don't live in that type of country and as such behaviour of the ACC in this manner would be clearly quite unlawful in more ways than one.

You go on to site a decision of the ACC
ACC has identified you had earnings immediately before incapacity so you are eligible for a calculation under Clause 38. The earnings you received are earnings received as a self-employed person and those earnings can only be calculated in the relevant year. As you have no earnings in the relevant year you are entitled to 80% of Nil. This requires ACC to calculate your entitlement under Clause 42. (More on that later)
There is no doubt that the ACC has misinterpreted this section of the act to their own advantage and disregarded other sections of the act in a manner that can only be described as wilful disobedience for the purposes of pecuniary advantage. As the wording you have provided above is virtually the same as wording I have received it seems to me that ACC has had a standardised approach with the expectation that front-line staff rather ignorantly pigeonhole such claimants. Evidence of this pigeonholing is as follows. As I had such a decision as result in May of this year while I too was a newly self-employed person, an employee of a company that I owned 100% along with other earning streams from other activities the ACC made a decision simply by going to the tax department to determine earnings. No enquiry of my potential allowable earnings was ever directed towards myself. The only communications that the ACC made with me was to confirm preconceptions of the ACC. In other words they submitted to me loaded questions. I sought clarification of those questions which resulted in the ACC shopping up shop,, making a decision and requiring me to address the matter by way of review hearing. The review hearing that the ACC arranged was by teleconference and still without the ACC making any disclosure. Clearly we have lots of ACC jiggery-pokery going on of these types of cases.

One of the points of law that the ACC have disregarded is that the tax department is not the sole source of information that the ACC is to rely upon when determining earnings compensation. For example an ordinary person might get an ordinary job and have an ordinary accident preventing them from earning with the whole time the employer not even registering the claimant for PAYE which means there will be no record with the tax department concerning the claimant's earnings. These business management issues are of course nothing whatsoever to do with the claimant and cannot in any way or form alter the claimant's entitlement to earnings compensation. As such the ACCs decision making process is fatally flawed just that that one scenario. I'm sure there are going to be large numbers of different circumstances whereby claimants are going to be denied earnings compensation and require to undergo burdensome challenges through the judiciary with the standard less than 30% chance of success resulting in the ACC making unlawful gains. Given the systematic approach by the ACC does seem that there is an orchestrated effort to produce documents for their own financial gain without nine those documents are true at the very least and at the very worst and most evil a definite plan to take advantage of the injured and the statistical probability that they will not succeed in gaining their true entitlements.

Historically the ACC corporate has issued its instructions to the front-line staff to make decisions that are legally arguable from their own common sense point of view in conjunction with a peer review system with them the context of their peer group as opposed to providing comprehensive training in compliance with the ACC legislation. In other words front-line staff are left to work matters out for themselves with a legal team to tidy up the mess later. The problem with this approach is that more likely than not decisions are going to be made in the ACC's favour with those decisions being inherently made by way of incompetence rather than provable dishonesty in mind thus not reaching the threshold of the evil mind necessary in a criminal court. The result has been that front-line staff request to chase the approval of their masters, ranking, point systems and suchlike which gets claimants of the front lines desk and onto someone else's desk with production line efficiency without regards to a quality control other than the complaint of the customer. As the ACC has the capacity to avoid cases going to court that would create case law against their behaviour the ACC is able to exert a gradualism style approach upon the case law of our country which will find a fellow poster Grant Mac promoting such virtues on this site when seeking to bypass legislated criteria in favour of persuasion of the courts. Other people rely upon the media or friends and friends of friends to manipulate matters in their favour. Such an approach would never work in a commercial environment but does work within the context of an monopoly such as with communism and those who have socialist aspirations. It is for this reason that the ACC scheme will fail in the same way communism always fails. The problem as it takes 30 or 40 years for commonest systems to fail.


I therefore comment on your last statement
I will be continuing the battle to hold ACC accountable but the public need to know now.
The question is in what form should this battle take place. When the ACC consider that they have become all-powerful within the ACC/traditional environment they then perceive a risk of violence as a natural consequence of their behaviour. This flags the ACCs mindset and interest in dirty tactics which I note that you have also alluded to within your article.
To hold the ACC accountable I don't think there is much merit in holding the logo and/or the corporate accountable As we are addressing individual persons who are making these decisions. You have referenced the executive for example. On the other end of the scale is the front-line staff who will is no doubt claim that they were acting under orders with the expectation that this will get them off the hook.

With regards to accountable of course there is no individual accountability within the ACC legislation and even at the corporate level the corporate is only required to pay entitlements with the reference to making payment for the damage they cause to people's lives in the process of the injured engaging with the Corporation. For example a different approach for the ACC is for a private investigator to investigate a small business owners customers and all other connections with the company with the result that they cause the absolute and complete destruction of that company. The typical approach is for the private investigator to go to a customer of the injured and say that they are investigating the injured for fraud and ask that customer to confirm various matters. Obviously that will cause a cessation to any further business thus the ACC creates a self-fulfilling prophecy that the claimant is not earning or had no means of earning in the event that the claimant is able to carry on work in this company on light duties while recovering as the loss of earnings capacity will be attributable to a business failure rather than injury causing loss of earnings.

You will need to let the public know what you are observing has a very limited effect in as much as you ACC is a monopoly and even if the public were completely aware of what was going on what could possibly change? So your strategy in your battle does not have a great effect when publicising such matters and will certainly destroy any future business opportunity of your client as your client relies upon his personal integrity of which the ACC have set out to destroy. I think what is really going on here is that the ACC is engaged in the quest to reduce its liabilities and has been motivated at some stage to go further than the legislation will endorse or at least the ACC does not take a middle-of-the-road approach but tweaks's decisions in favour of itself and own financial interest. Individually this is practically invisible but statistically it is not. Statistically will be able to prove dishonesty by way of the wilful failure to strain front-line staff in the proper application of the law and the existence of a conspiracy to deprive claimants of entitlements. As was stated by the CEO of ACCC Australia the proper approach is to bring about private criminal prosecutions against a few well chosen employees of the ACC in New Zealand to the extent that they are put in prison. This will have an immediate effect of the individual employees of the ACC seeking out and confirming that their decisions are in accordance with legislation.
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#3 User is offline   Lupine 

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Posted 04 October 2017 - 12:54 PM

The Tax system is markedly different from the regime you operated under back in the day Alan.

There is the type of self-employed person such as myself. I do not pay schedular payments. At the end of every tax year I file the accounts and expenses are subtracted from income resulting in whatever liability if any I may have.

Then there is the schedular PAYE self-employed person.

For example a Real Estate Salesperson. This person sells a home, the commission is paid to the agency who deducts PAYE from the commission and the salesperson receives the net amount. So PAYE tax is paid at the time income is received and at the end of the financial year the salesperson can deduct expenses. Once this has occurred what was once schedular earnings are now earnings as a self-employed person that are now present in what is now the relevant year. As PAYE is present immediately before incapacity ACC is liable.

If I had income as my class of self-employed person then I would be out of luck as I would not have paid tax PAYE immediately before incapacity however I can pay PAYE schedular payments to myself and provide the tax at the time to IRD. I simply have to arrange it with IRD.
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#4 User is offline   Alan Thomas 

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Posted 04 October 2017 - 02:52 PM

I may have been little detailed in my response concerning how the ACC legislation requires the ACC to administer the act in order to determine earnings.
In essence what I said was that PAYE in itself does not indicate or a new way attempt to represent a claimant's earnings for purposes of ACC earnings compensation.

For example if someone is having PAYE deducted in the manner you have described in accordance with that particular standardised approached for that category of self-employed person then the ACC is not restricted to determine earnings compensation just on the IRD information alone. That would be unlawful and the ACC are quite aware of this fact given that they have been repeating this type of misconduct for perhaps two or three decades as far back as in the cases where your type of scheme was an optional scheme.

Take for example the self-employed person who pays no PAYE or any form of income tax whatsoever yet managed to generate earnings. ACC except that this type of earnings is capable of being deducted from earnings compensation payments by way of and as such what is good for the goose is good for the gander so on that basis ACC must pay out earnings compensation quid pro quo.
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#5 User is offline   Lupine 

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Posted 05 October 2017 - 08:34 AM

Scoop has published my article. Got to love Scoop.

http://www.scoop.co....t-continued.htm
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#6 User is offline   Lupine 

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Posted 05 October 2017 - 08:37 AM

View PostAlan Thomas, on 04 October 2017 - 02:52 PM, said:

I may have been little detailed in my response concerning how the ACC legislation requires the ACC to administer the act in order to determine earnings.
In essence what I said was that PAYE in itself does not indicate or a new way attempt to represent a claimant's earnings for purposes of ACC earnings compensation.

For example if someone is having PAYE deducted in the manner you have described in accordance with that particular standardised approached for that category of self-employed person then the ACC is not restricted to determine earnings compensation just on the IRD information alone. That would be unlawful and the ACC are quite aware of this fact given that they have been repeating this type of misconduct for perhaps two or three decades as far back as in the cases where your type of scheme was an optional scheme.

Take for example the self-employed person who pays no PAYE or any form of income tax whatsoever yet managed to generate earnings. ACC except that this type of earnings is capable of being deducted from earnings compensation payments by way of and as such what is good for the goose is good for the gander so on that basis ACC must pay out earnings compensation quid pro quo.


I agree that PAYE is not the only income stream available. There is also earnings received as a self-employed person.

In this case there is PAYE paid immediately before incapacity but ACC have altered the tax status of those PAYE earnings to earnings received as a self-employed person thus defeating Clause 38 (2)(a) unlawfully.
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#7 User is offline   Alan Thomas 

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Posted 05 October 2017 - 10:21 AM

View PostLupine, on 05 October 2017 - 08:37 AM, said:

I agree that PAYE is not the only income stream available. There is also earnings received as a self-employed person.

In this case there is PAYE paid immediately before incapacity but ACC have altered the tax status of those PAYE earnings to earnings received as a self-employed person thus defeating Clause 38 (2)(a) unlawfully.


Are you able to Post a Word for word copy of the ACC decision in this matter that clearly states the section /clause of the act,Information and rationale the ACC have applied to the legislation?

I suspect I understand where the ACC are coming from but would need this information to be sure.
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#8 User is offline   Lupine 

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Posted 05 October 2017 - 11:44 AM

View PostAlan Thomas, on 05 October 2017 - 10:21 AM, said:

Are you able to Post a Word for word copy of the ACC decision in this matter that clearly states the section /clause of the act,Information and rationale the ACC have applied to the legislation?

I suspect I understand where the ACC are coming from but would need this information to be sure.


I failed to mention that ACC is changing the tax status at the DOFI.
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#9 User is offline   Lupine 

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Posted 05 October 2017 - 12:04 PM

I will be publishing the complete application of the Clause soon. Unless a person can see all the issues and apply them correctly the Clause is impossible to understand.
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#10 User is offline   Alan Thomas 

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Posted 05 October 2017 - 12:12 PM

Are you able to Post a Word for word copy of the ACC decision in this matter that clearly states the section /clause of the act,Information and rationale the ACC have applied to the legislation?
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#11 User is offline   Lupine 

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Posted 05 October 2017 - 03:56 PM

View PostAlan Thomas, on 05 October 2017 - 12:12 PM, said:

Are you able to Post a Word for word copy of the ACC decision in this matter that clearly states the section /clause of the act,Information and rationale the ACC have applied to the legislation?


At this stage I have about 10 different rationales provided by ACC and not even ACC really knows which one it is relying on so for all intents and purposes, no. The arguments presented in the ACC sub are different again and now is not the time or place.
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#12 User is offline   Alan Thomas 

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Posted 05 October 2017 - 06:00 PM

View PostLupine, on 05 October 2017 - 03:56 PM, said:

At this stage I have about 10 different rationales provided by ACC and not even ACC really knows which one it is relying on so for all intents and purposes, no. The arguments presented in the ACC sub are different again and now is not the time or place.


I understand the difficulties. In my case the ACC made five different written decisions before finally settling on one decision which of course is the decision that needed to be appealed.

In the case that you are dealing with did they make 10 different written decisions?

What was the final written decision made and what was the legislation and rationale they relied upon for their decision?
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#13 User is offline   MINI 

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Posted Yesterday, 01:13 PM

View PostLupine, on 05 October 2017 - 11:44 AM, said:

I failed to mention that ACC is changing the tax status at the DOFI.


This is going to be seriously interesting as to other matter with the ACC and their use of IRD. BUT it would be helpful if you would give us the interchange made by ACC asap as your other matters quoted as above are then maybe not relevant.

Depending on the amount your client has or was to have paid the IRD as paye on first payment as income, it could clear the actions of the ACC department up very quickly.

Claire.
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#14 User is offline   MINI 

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Posted Yesterday, 01:19 PM

View PostLupine, on 05 October 2017 - 03:56 PM, said:

At this stage I have about 10 different rationales provided by ACC and not even ACC really knows which one it is relying on so for all intents and purposes, no. The arguments presented in the ACC sub are different again and now is not the time or place.


Your first sentence covers exactly what happened when I came across the discrepancy in all taxes being paid in the one year of several in the taxing of the backdated w/c in one year. The lower people know nothing about the why, when and how, they only do what they are told.

The people who know are the ones that write the law in conjunction with IRD. You will find they have one of those unwritten agreements again.

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