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ACC claimants losing millions under tax system - lawyer fao Mini

#1 User is offline   anonymousey 

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Posted 20 December 2017 - 07:57 PM

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ACC claimants losing millions under tax system - lawyer

People receiving backdated payments from ACC are losing millions of dollars by being taxed at high rates for lump sums - but the government says changing the system isn't a priority.

One man, who is waiting on payments from ACC spanning eight and a half years, says he is owed nearly half a million dollars.

But he said he would lose about $120,000 because he would be taxed as if all the money was earned in a single year, meaning most would be taxed at the top rate of 33 percent.

He said it was frustrating to finally win a payout but then miss out on a huge chunk of it.

"There are lots of people in the same situation as me and ... they've just all been pounded ... into the ground by ACC," he said.

"Suddenly when they see the light at the end of the tunnel, there's a shark circling wanting to take a big chunk out of them and that's exactly what the IRD are doing, it's soul destroying."

He's not the first to complain - in 2010 the Ombudsman said the way ACC taxed lump sum payments was unfair.

Barrister and accident compensation researcher Warren Forster said the Ombudsman told ACC that if people were missing out because of the tax rules, it could make up the difference with an ex gratia payment.

But he said ACC was only doing that if it thought it was guilty of a serious service failure.

"When ACC looks at it and says 'Oh look we got it wrong back in the day, the person has to pay extra tax but it's not a serious service failure'... the person is then left with no remedy," said Mr Forster.

"They can't go to review and appeal and fix it. That leaves people feeling as though they've been completely put through the mill by the system and then the system has taken away their entitlement to gain."

Phil Schmidt from Schmidt and Peart Law said the unfairness of the tax system was a long-standing issue and he estimated claimants had lost millions of dollars because of it.

"Remember that this was a problem even before the 2001 [Accident Compensation] Act came into play," he said.
"Many hundreds of thousands of back-dated payments are made every year and every time that there's back-dated attendant care [and] weekly compensation, there will be over-taxation."

In a statement, Inland Revenue said it did not know how much money claimants had missed out on by having to pay tax with only one rate.

It said it was not possible under current law to tax lump payments as if they had been earned over multiple years.
Mr Schimdt said it was time the law changed.

"With the new government, hopefully we'll make some progress because at the moment ... these things tend to attract some public attention, then they're put into the too-hard basket life just moves on," he said.

"But for the families and the individuals involved, they've got to live with the consequences of this lack of reform."

But there was no sign the new government would look at making changes.

As a former opposition MP, Iain Lees-Galloway was a frequent critic of ACC, saying that under National it was taking money from people who needed it.

Now as the Minister for ACC, a spokesperson said Mr Lees-Galloway was aware of the tax issue but he would not be commenting and inquiries should be directed to the Revenue Minister, Stuart Nash.

A spokeswoman for Mr Nash said while he also knew about the issue, the Inland Revenue Department did not consider legislative change a priority.

Anyone with concerns should write to Mr Nash, she said.


Mini

Just spotted this & thought of you :)

My apologies for not posting into forum much ... i find much of the chronic alanforum nonsense &or dangerous deceptions exhausting etc

Best wishes for 2018 ttfn
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#2 User is offline   anonymousey 

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Posted 20 December 2017 - 08:59 PM

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Injured New Zealanders stung by huge tax bills after receiving ACC back-payments
20 Dec, 2017 5:50pm

Almost 300 injured New Zealanders were stung by huge tax bills last year after receiving hefty back-payments from ACC - an issue which has been repeatedly brought to the Government's attention for more than a decade.

Hundreds of Kiwis receive back-payments from ACC each year either because they lodged a late claim, because they won a case for compensation which ACC had previously refused, there were re-calculations or because complex claims required a lot of investigation to determine cover.

In the last financial year there were 296 back-dated weekly compensation payments of $50,000 or more, most of which covered a period of at least a year.

In many cases these people were paid out tens or even hundreds of thousands of owed to them in a lump sum pushing their revenue for the year into the highest tax bracket.

For many of those injured New Zealanders, that equated to a tax bill thousands of dollar higher than what they would have been paying had they received their compensation each week since the accident as most ACC clients did.

One man, who shared his story anonymously, has just received a back-payment of more than $400,000 after a nine year battle with ACC which started when he fell off a mountain bike.
The man had not been able to go back to his job since and had been fighting for weekly compensation. But tax rules meant that, where he would have been taxed about $71,000 had he been paid out each week, he was now expecting to lose more than $150,000 to Inland Revenue.

After calling Inland Revenue to try to resolve the problem, he was issued with a special tax code which meant the money would be treated as a second taxable job at a flat rate of 33 per cent across the whole amount.
Despite the sizable payout he expected he would only be left with about $150,000 once tax and Work and Income repayments were taken out.

"The IRD are treating late payments in the same way as holiday bonuses or tips. It's just wrong," he said.

"How would anyone else feel if their boss didn't pay them for years and then gave most of it to the taxman?

"I am pissed off. I have written to the Prime Minister and Minister of Revenue asking that the tax code be amended retrospectively as a matter of urgency. Thousands of our most vulnerable are being kicked in the guts by the IRD after they've endured prolonged torture from ACC."


An ACC spokesman acknowledged many clients were dissatisfied with the way their back-dated weekly compensation payment was taxed but said the organisation had no discretion about the tax rate, nor the discretion to split payment calculations if the payments covered more than one tax year because it had to follow the rules set by the Income Tax Act.

The country's top ACC lawyers agreed the current situation was unfair and needed to change.

Warren Forster of Forster and Associates said it had been a "huge gaping issue" for at least a decade.
In 2010 the ombudsman made note of the problem in his report and noted he waited with interest to see the result of ACC raising the issue with the Minister for ACC.

Since then nothing had been done, Forster said.

"It's just so unfair. Imagine if you've been cut off, you make it through the dispute resolution process, and you have to go through all this stuff for, in some cases, 10 years, and then you're subject to extra tax. If ACC paid it at the time you wouldn't have paid anywhere near as much tax," he said.

"This is exactly why we need a Personal Injury Commissioner. Someone needs to hold ACC and the Government into account on these longstanding systemic issues. No one else is doing it."

Phil Schmidt of Schmidt and Peart Law and John Miller of John Miller Law both agreed it was a major issue.

Schmidt said the fair way to do it would be to proportion the tax payments over the years they were for, he said.
Most people who were back-paid would be paid for at least two years as it was rare for the issue to be sorted out in a shorter time.

"For people in the middle income, it hits them the hardest. They are short changed quite a lot, he said.
ACC Minister Iain Lees-Galloway said he was aware of the issue but it was one which needed to be dealt with by Revenue Minister Stuart Nash.

Nash said he was also aware of the issue however he had not received any briefings on the matter.

Inland Revenue had not identified it as a priority for legislative change but people were welcome to email the Minister with concerns and proposals.

http://www.nzherald....jectid=11963405

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#3 User is offline   Alan Thomas 

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Posted 21 December 2017 - 09:12 AM

Tax law as it stands is the tax law. Tax and and death is certain.

Whenever anybody carries out an action on neglects to carry out an action cause a loss to another person it follows that those an error carry the liability and must reimburse those you have experience losses. The ACC is not different and has no protection from this fundamental principle.

As such the proper approach to this problem is to ask ACC to make good on the losses caused by their own actions or inaction's and if they fail then the ACC would be sued in the ordinary court for those losses. All that would need to be done is to establish what losses had been caused by the ACC by way of the evidence. The evidence would be quite simple in as much as the ACCs delayed decision to make payment that has caused the tax liability to be incurred because of the ACCs deficiencies with that information/evidence coming from the ACC themselves. The court would have no choice but to direct the ACC to make good on that loss.

Quite simple really.

I don't know why people become embroiled in all kinds of protests and shenanigans's concerning this problem????
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#4 User is offline   MINI 

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Posted 22 December 2017 - 10:05 AM

Thomas

People get involved in this Tax situation because it needs a change of law at Parliament.

It also needs someone who has the guts to keep on pushing it as far as the High Court.

No one does that not even Forster, because they do not understand Tax law and Tax lawyers are too expensive to hire for most individuals let alone one with only a partial income.

How many of you have read my one at the High Court. Hands up, oh none well that would be about right because you all have no idea what you are talking about.

You would find that if you take ACC to court on this you would lose as it is you that sets your own tax payment, only it is the IRD who will alter it at the end of the financial year if you haven't got it right. This is why ACC has stuff all to do with it and IRD will make you pay what they want you to pay, which I note is 33%. I should go for a refund from them, because mine was a lot more than that. I will keep that in mind.

Thank you Mousey for the nzherald scoop. All of those high up people being aware as well as Little as I told him when he started in Parliament. And nothing was ever done about it.

Good time to bring it out, right before Xmas. No one around much to do anything about it so it will have to go on hold until people start opening their offices again.

Mousey have a very merry Xmas and happiest of New Years. Lets make it a year to be reakoned with.

Mini
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#5 User is offline   doppelganger 

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Posted 22 December 2017 - 11:17 AM

View PostMINI, on 22 December 2017 - 10:05 AM, said:

Thomas

People get involved in this Tax situation because it needs a change of law at Parliament.

It also needs someone who has the guts to keep on pushing it as far as the High Court.

No one does that not even Forster, because they do not understand Tax law and Tax lawyers are too expensive to hire for most individuals let alone one with only a partial income.

How many of you have read my one at the High Court. Hands up, oh none well that would be about right because you all have no idea what you are talking about. I Have

You would find that if you take ACC to court on this you would lose as it is you that sets your own tax payment, only it is the IRD who will alter it at the end of the financial year if you haven't got it right. This is why ACC has stuff all to do with it and IRD will make you pay what they want you to pay, which I note is 33%. I should go for a refund from them, because mine was a lot more than that. I will keep that in mind.

Thank you Mousey for the nzherald scoop. All of those high up people being aware as well as Little as I told him when he started in Parliament. And nothing was ever done about it.

Good time to bring it out, right before Xmas. No one around much to do anything about it so it will have to go on hold until people start opening their offices again.

Mousey have a very merry Xmas and happiest of New Years. Lets make it a year to be reakoned with.

Mini


But I think that it should be the staff including the board members that pay the extra tax. Then the persons who cause the problem are penilised for making the problem.
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#6 User is offline   Alan Thomas 

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Posted 22 December 2017 - 11:18 AM

Mini in the event that there is no law change whereby an exception is created for circumstances relating to the event that ACC stuffs up fails to pay as and when is required resulting in an accumulation with the knock-on effect that a seemingly unfair tax burden is imposed are you able to describe the legal mechanism by which the claimant is not disadvantaged?

When reading the judgement surrounding your case all that I am seeing is that there has been a one-off compromise being made to accommodate you will need which in no way resolve the problems for all. ACC is free to carry on doing what they are doing along with the tax department as there is no process imposed.

As you will read my posting I believe the current position is judicial review that will result in ACC reimbursing the claimant for the losses that they have generated by their misbehaviour. Quite simple and quite usual for these types of circumstances.

Perhaps it might be better to Disengaged from your own case and approach the court for a directions order To be imposed upon the ACC in these circumstances. Perhaps you should consider this along with what you have done and my question that I opposed to you in the first sentence.
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#7 User is offline   Alan Thomas 

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Posted 22 December 2017 - 11:19 AM

View Postdoppelganger, on 22 December 2017 - 11:17 AM, said:

But I think that it should be the staff including the board members that pay the extra tax. Then the persons who cause the problem are penilised for making the problem.


Agreed.

In accordance with a lawful society it is always the person that caused the problem that bears the cost which necessitates going to court for a direction from the court to be imposed for that purpose.

It seems to me that at this stage the tax department is the innocent party!
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#8 User is offline   MINI 

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Posted 02 January 2018 - 03:50 PM

Thomas

There needs to be a change in the law for dumping us into a tax position that they had no need to do.

The law does not need changing as it is needed for others, but not for ACC claimants when ACC have bee the guilty party in all of this. But instead of sueing ACC a new law for us and us alone could be made to endeavour to keep the courts out of it all together.

There is a law in the 1994 Tax act that I had not after the use of the extra emolument by Ird was not allowed to be used by ACC when paying our monies and taxing it to IRD.

If ACC are still using the extra emolument section then they need to have my case shoved up their nose to remind them that it was an order of the High Court.

So you could write a letter to the Finance Minister or whoever looks after the Taxation and IRD.

Good Luck. In the meantime I will do my bit by trying to get some time in among the other three issues I have going on. I will try to go for change of legislation as it is unfair and unjust.

Mini
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#9 User is offline   Alan Thomas 

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Posted 02 January 2018 - 04:12 PM

View PostMINI, on 02 January 2018 - 03:50 PM, said:

Thomas

There needs to be a change in the law for dumping us into a tax position that they had no need to do.

The law does not need changing as it is needed for others, but not for ACC claimants when ACC have bee the guilty party in all of this. But instead of sueing ACC a new law for us and us alone could be made to endeavour to keep the courts out of it all together.

There is a law in the 1994 Tax act that I had not after the use of the extra emolument by Ird was not allowed to be used by ACC when paying our monies and taxing it to IRD.

If ACC are still using the extra emolument section then they need to have my case shoved up their nose to remind them that it was an order of the High Court.

So you could write a letter to the Finance Minister or whoever looks after the Taxation and IRD.

Good Luck. In the meantime I will do my bit by trying to get some time in among the other three issues I have going on. I will try to go for change of legislation as it is unfair and unjust.

Mini


Mini I do not believe for one moment that the IRD is it wrong on any of this and as such I do not agree that there needs to be a law change for the IRD.

I don't know why you think that different people to have different types of laws applied to to cover over the wrongdoing of yet another party which in this case is the ACC. When someone does wrong and courses extra expenses to be incurred the usual thing is to sue the person who has done the wrong. This would traditionally goes back hundreds and hundreds of years so MiniI don't think you are correct in your approach.
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#10 User is offline   MINI 

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Posted 06 January 2018 - 11:09 AM

View PostAlan Thomas, on 02 January 2018 - 04:12 PM, said:

Mini I do not believe for one moment that the IRD is it wrong on any of this and as such I do not agree that there needs to be a law change for the IRD.

I don't know why you think that different people to have different types of laws applied to to cover over the wrongdoing of yet another party which in this case is the ACC. When someone does wrong and courses extra expenses to be incurred the usual thing is to sue the person who has done the wrong. This would traditionally goes back hundreds and hundreds of years so Mini I don't think you are correct in your approach.


thomas
years back as far as you appear to have gone, plebs whom tried to scam the taxman were hunted down and hung.

mini
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#11 User is offline   Alan Thomas 

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Posted 06 January 2018 - 11:49 AM

View PostMINI, on 06 January 2018 - 11:09 AM, said:

thomas
years back as far as you appear to have gone, plebs whom tried to scam the taxman were hunted down and hung.

mini


Well I don't think it needs to go that far for the ACC who have scammed the taxman. They just need to be responsible for their actions and if they fail to pay a claimant on time then it is they that must be responsible for any additional taxes. The tax department is not at fault and neither is the legislation. The problem lays exactly at the feet of ACC just like doppelgänger says.

Mini I'm quite surprised that a former IRD employee should be so ignorant of what has gone wrong and how it should be fixed. This is not rocket surgery. For all eternity it has always been the person that has caused the problem that must bear the responsibility. ACC caused the problem then they must pay the price. I don't know why you need to try and make a complicated when it isn't. Of course the ACC love people like you to make a complicated because it is people like you that end up creating obstacles for those who have been wronged much to the ACCs delight which makes me question as to who you are working for?
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#12 User is offline   greg 

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Posted 06 January 2018 - 07:56 PM

View PostAlan Thomas, on 06 January 2018 - 11:49 AM, said:

Well I don't think it needs to go that far for the ACC who have scammed the taxman. They just need to be responsible for their actions and if they fail to pay a claimant on time then it is they that must be responsible for any additional taxes. The tax department is not at fault and neither is the legislation. The problem lays exactly at the feet of ACC just like doppelgänger says.

Mini I'm quite surprised that a former IRD employee should be so ignorant of what has gone wrong and how it should be fixed. This is not rocket surgery. For all eternity it has always been the person that has caused the problem that must bear the responsibility. ACC caused the problem then they must pay the price. I don't know why you need to try and make a complicated when it isn't. Of course the ACC love people like you to make a complicated because it is people like you that end up creating obstacles for those who have been wronged much to the ACCs delight which makes me question as to who you are working for?


Mr Thomas , you of all people have no right to question a claimants attitude
to being paid out by ACC for any reason and why they accept this situation.

If you every were in a position to receive a back payment from ACC , which I doubt
will ever happen , you will accept their terms in a instant , just to put a finish to
their wrong doings , rather than your proven and constant failures in reviews, all NZ. courts etc.

Everything is sorted during the next tax return anyway.

I agree with Mini , it is wrong but ,but , but money in the bank . === haha.
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#13 User is offline   Alan Thomas 

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Posted 07 January 2018 - 09:36 AM

View Postgreg, on 06 January 2018 - 07:56 PM, said:

Mr Thomas , you of all people have no right to question a claimants attitude
to being paid out by ACC for any reason and why they accept this situation.

If you every were in a position to receive a back payment from ACC , which I doubt
will ever happen , you will accept their terms in a instant , just to put a finish to
their wrong doings , rather than your proven and constant failures in reviews, all NZ. courts etc.

Everything is sorted during the next tax return anyway.

I agree with Mini , it is wrong but ,but , but money in the bank . === haha.

Greg it seems that you are confusing intellectual cognizance of the situation with "attitude". Mini has made a fundamental strategic mistake and unnecessary complicated her problem to the advantage of the ACC who delight in making things more complicated than they already are. Further mini has failed to address responsibility and culpability issues but instead created a complex compromise that will be expensive for any claimant to follow.

Greg what I'm saying to you properly is falling on deaf ears due to your inability to understand such matters but at least others reading this thread will understand.
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#14 User is offline   anonymousey 

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Posted 07 January 2018 - 01:57 PM

Thank you for the additional insights into the world of taxation and some of this technical material Mini :wub:

In addition to the specifics of lumpsum taxations and losses incurred by claimants Mini, I do find it very helpful to consider any differences with the taxation systems overseas too eg WINZ & IRD can calculate to the last cent for Sec70 deductions by using official records upon different taxes being paid over a 50 year period that has been operating for millions and millions of people ...but cannot do it here ...yup this blatant discrepancy will make my mind boggle sometimes and wonder if something else is going on Mini :wacko:




ps please ignore any trolling and offtopic hijacking from Alan .... & Yup I have made a pointless report to the forum code robots concerning your personal attacks and abuse of members Mini & greg in this thread Alan :angry:
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