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Open Letter to Scott Pickering demanding resignation

#101 User is offline   Grant-Mac 

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Posted 03 July 2018 - 04:55 AM

View PostMINI, on 02 July 2018 - 05:46 PM, said:

I worked with tax under the 1994 Act and 74/72 Act before that. I have had nothing to do with the 2004 2007 Acts as I spend six years fighting for all on here to have to pay less tax on the one off payment of weekly compo when ACC Fks up!!

Recently the tax dept has been has been quoted as saying "Inland Revenue told a select committee that proposals would be developed 'aroun addressing fairness concerns with taxation in lump sump payments" without providing further details.

Now I can tell you that the Justice in the high court said I was correct and now Inland Revenue is doing something about it 8 years later.
You are the lawyer Grant you are supposed to be able to do all taxes. You should not need me here to give you answers to tax questions that come under the new tax acts. I being me, who does not get paid for doing anything for anybody have no intention of moving into the new acts unless I need them for myself. I will put my solutions up here, if I ever have to do it. But I hardly think it is likely. One thing IRD knew I had loads of and that was intigrety. And I will read your new stance on what Schedular tax is. I gave you the other name it was known by, so if you looked under that you would know I am aware of the taxes concerning those groups of people.

Progressive tax is what it was know as in the 1994 ITA.


Be back at you later.

Mini


Mimi,

I think you misunderstand, I'm not asking you to do anything. My link was merely to identify what is defined as a schedular payment for Thomas. That is it.

Grant
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#102 User is offline   Grant-Mac 

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Posted 03 July 2018 - 05:27 AM

View PostLupine, on 02 July 2018 - 03:10 PM, said:

This concept has defeated the greatest legal minds since forever.

Schedule 4 levies ANY PAYE Income Payments. All classes of PAYE Income Payments are in RD 3 which both Section 6 and Schedule 4 point straight at.

So ALL types of PAYE INCOME listed under RD 3 (1) MUST BE LEVIED!

The legislation must be read from the START of the process to the END of the process having regard for the meanings in ALL the WORDS as they are WRITTEN according to the ENGLISH LANGUAGE.

But no. It seems what everyone else wants to do is go for a wander through the Income Tax Act and find some unrelated meaning that used to apply to the process pre amendment and bypass the entire consideration.

THAT IS NOT THE LAWFUL AND LOGICAL WAY TO READ THE LAW.


I think the issue here is whether a schedular payment paid to a person, for the purposes of s221, is included as a payment in their earnings, wages, salary as an employee. If it is, then it is not a schedular payment at all: it is earnings, wages, salary and is captured and required to be levied.

If it classified as a schedular payment, and it is not part of earnings, wages, salary: then it falls outside of the earnings, wages, salary and cannot be levied.

Your argument that if it is PAYE income and appears in s RD 3(1) and is the ending point of the interpretative exercise I would submit is incorrect. Section 221:

Quote

221 Collection of levies by deduction from employee earnings
(1)
For the purpose of enabling the collection of the levies payable under section 219 by instalments,—
(a)
when an employer or a PAYE intermediary for an employer makes a payment to an employee that is included in the earnings of the person as an employee of the employer, the employer or person must, at the time of making that payment, make a deduction in accordance with this section from that amount on account of the levy payable:



So the 'payment' must be [included] as employee earnings. Essentially any test applied to inclusion will look for consistency and regularity in the payments.

So going back to Schedule 4 ACA:

Quote

Schedule 4
Deductions on account of earner levies
s 221(2)

1
Subject to this schedule, the PAYE rules of the Income Tax Act 2007 (the PAYE rules) apply, with all necessary modifications, with respect to—


What does 'with all necessary modifications' mean? I would submit that it means that the [further] definitions provided in sRD 3(1) are pursued.

RD 3(1) has those three sub-sub-sections, one of which is Schedular payments. Looking first at Salary/Wages, which is subject to the PAYE rules and which is non-contentious, you are taken to RD 5. Here, schedular payments are excluded.

A schedular payment is defined in RD 8 and is excluded in salary/wages because it is taxed in its own right in Schedule 4 ITA.

As already stated, I do not read RD 3 as a 'finishing point' of the inquiry: I see it as the 'starting point' of the inquiry.

If the 'payments' are regular [reasonably consistent] then they are more likely to be earnings/wages/salary. If however the payments [for whatever reason] are classified as 'schedular payments', they will in [my opinion] be excluded.

The difficulty that I have with your [seeming] argument is that you [seem] to be arguing that a payment that is classified as a schedular payment, should be subjected to a levy pursuant to s221 ACA.

Grant
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#103 User is offline   Lupine 

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Posted 03 July 2018 - 06:12 AM

If the legislators wanted to limit PAYE Income Payments to Salary and Wages then the meaning would point straight to RD 5 OR in the alternative just not added in Schedule 4 22 as Salary and Wages were already being levied under Section 221 as they have been since ACC first started. The legislators would not have added in the definition amendments in 2008 to levy earnings that were already being levied and point to RD 3 instead of RD 5 cause that would be stupid. It would be wouldn't it?

IRD did not make the ACC levy process part of their Schedular Deduction process because they were bored. I also note the section 6 def for PAYE Income Payments points to Rd 3 (1) specifically not RD 3 as a general consideration. It is clear the legislators wanted ACC to confine its consideration to the sub section required to prevent such generalized musings.

The purpose of Section 221 (1)(a) is to place a legislative requirement on employers to pay all employees and it is the IT Act that determines what an employee is as all the definitions in the AC Act point to the IT Act. That is the purpose of the sub section. It is not a "consideration" for ACC to apply definitions to. ACC has no power to determine what is an an employer and what is an employee. All considerations take place under Schedule 4.

I repeat. The legislators would have pointed to RD 5 if the consideration was confined to Salary and Wages not create a situation where ACC would have to leap 15 hurdles to achieve what was already in place.
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#104 User is offline   MINI 

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Posted 03 July 2018 - 12:14 PM

View PostGrant-Mac, on 03 July 2018 - 04:55 AM, said:

Mimi,

I think you misunderstand, I'm not asking you to do anything. My link was merely to identify what is defined as a schedular payment for Thomas. That is it.

Grant


Grant

Reading them this morning and seeing all the amendments attached to ACC Fact 2001, with some of them not being in vogue yet, it is a flipping nightmare. It can be done but you would want to have a few hours or even days spare. as I said previously, I would want to see the paperwork that the claimant put into the tax dept before it started work, then that would tell what they were expected to be doing, before the accident, then half your battle is won. However I tend to prefer Schedule 4 of ACC Act 2001 "Deductions on account
td of earner levies." and YA1 of the Income tax Act 2007 at a cursory glace.

There is nothing stopping a claimant from using to parts of the Acts and use them in Court. If it could be an either or situation. That would solve the problem of the definition of 'or' in your post as above.

Take one from this section 4 of ACC and one from the IRD ACT 2007 if they are different or have totally different meaning it would be remiss to not include them both wouldn't it. Wouldn't be the first time a discrepancy of definition has been argued would it.

Nope in a while I will be off to the library to get the AMA guidelines for a loan, then will only have for a month, so it will be all hands on deck for myself and my problems.

I will pop in to see how you are getting on. Take the easy road I would say and let the instinck led the way.

Mini
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#105 User is offline   Grant-Mac 

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Posted 04 July 2018 - 04:45 AM

View PostLupine, on 03 July 2018 - 06:12 AM, said:

If the legislators wanted to limit PAYE Income Payments to Salary and Wages then the meaning would point straight to RD 5 OR in the alternative just not added in Schedule 4 22 as Salary and Wages were already being levied under Section 221 as they have been since ACC first started. The legislators would not have added in the definition amendments in 2008 to levy earnings that were already being levied and point to RD 3 instead of RD 5 cause that would be stupid. It would be wouldn't it?

IRD did not make the ACC levy process part of their Schedular Deduction process because they were bored. I also note the section 6 def for PAYE Income Payments points to Rd 3 (1) specifically not RD 3 as a general consideration. It is clear the legislators wanted ACC to confine its consideration to the sub section required to prevent such generalized musings.

The purpose of Section 221 (1)(a) is to place a legislative requirement on employers to pay all employees and it is the IT Act that determines what an employee is as all the definitions in the AC Act point to the IT Act. That is the purpose of the sub section. It is not a "consideration" for ACC to apply definitions to. ACC has no power to determine what is an an employer and what is an employee. All considerations take place under Schedule 4.

I repeat. The legislators would have pointed to RD 5 if the consideration was confined to Salary and Wages not create a situation where ACC would have to leap 15 hurdles to achieve what was already in place.



Parliament in the ACA s11 sought to limit employee earnings by excluding schedular payments. So now there is a conflict in the ACA itself in section 11 and section 6, which I agree takes you to RD 3(1).

If we apply RD 3(1), we must follow through to Schedule 4 ITA. This schedule [defines] limits what constitutes a schedular payment. If the schedular payment received by a person, falls into this limitation, then there is an argument that this schedular payment ought to be included in the 'earnings' of that person. This has the effect then of converting a schedular payment into 'earnings', which is then included within section 11 ACA.

We then have RD 3(5) that will likely [in the first instance] allow the CIR determine the matter between your position and ACC's position.

If the CIR determines the matter against your position, then you could appeal that decision.

Grant
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#106 User is offline   MINI 

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Posted 04 July 2018 - 09:56 AM

View PostGrant-Mac, on 04 July 2018 - 04:45 AM, said:

Parliament in the ACA s11 sought to limit employee earnings by excluding schedular payments. So now there is a conflict in the ACA itself in section 11 and section 6, which I agree takes you to RD 3(1).

If we apply RD 3(1), we must follow through to Schedule 4 ITA. This schedule [defines] limits what constitutes a schedular payment. If the schedular payment received by a person, falls into this limitation, then there is an argument that this schedular payment ought to be included in the 'earnings' of that person. This has the effect then of converting a schedular payment into 'earnings', which is then included within section 11 ACA.

We then have RD 3(5) that will likely [in the first instance] allow the CIR determine the matter between your position and ACC's position.

If the CIR determines the matter against your position, then you could appeal that decision.

Grant


Grant

You can be sure the investigation into the claimant/s will take the road that I am saying you should take and that is the paperwork on registration should tell what the claimant/s chose and it will be just a flick of that which will tell you what rate and type of tax they should be on. But hey this would determine the problem one would think.

Hope it comes out the way you want Lupine.

Mini
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#107 User is offline   Grant-Mac 

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Posted 05 July 2018 - 05:16 AM

An analysis of section 221 ACA

A further issue that has arisen is how is this section to be correctly interpreted? Lupine in his reply [letter] correctly identifies the law for statutory interpretation. So, applying it we have:

The title: "Collection of levies by deduction from employee earnings". The plain meaning from the title are that levies are to be deducted from (a) earnings of (b] employees.

Subsection (1) has two subsections (a) and (b]. It is subsection (a) that concerns us. There is also a subsection (2). There is an issue here: how should these subsections be read? Are they to be read together or are they independent? In what order are they to be read?

My interpretation is that ss(1) is to be read first. It is numbered (1) and it directly addresses the purpose contained in the title. Second, ss(2) states that Schedule 4 applies to ss(1), which again requires that a deduction actually be made. Therefore ss(1) controls ss(2).

Grant
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#108 User is offline   Lupine 

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Posted 05 July 2018 - 04:18 PM

On the RD 8 issue that has been raised I answer as follows. As we can see below a schedular payment is a payment class as listed in schedule 4 of the IT Act. The IT Act Schedule 4 is solely concerned with the types of professions and industries all of whom fall into the definition of self-employed earners who are required by law to be paid taxed schedular payments. It also includes sales commissions as stated. RD 8 certainly excludes Salary and Wages which are described in RD5. Schedular Payments and Salary and Wage are listed as two distinct classes of PAYE earnings under RD 3. So therefore RD 3 itself informs us that they are two distinct classes. RD 8 supports this.

What RD 8 does NOT say or even imply is that Schedular Payments are not PAYE Income Payments. I invite anyone to point to me to the wording in RD 8 that even so much as touches on the matter. Schedule 4 of the AC Act requires that ACC levy ANY PAYE Income Payments. All the definitions that apply to RD 3. There is nothing to offer the Corporation relief in RD 8. It is totally irrelevant to the consideration.



Schedular payments

Meaning
(1)

A schedular payment—


(a)
means—


(i)
a payment of a class set out in schedule 4 (Standard rates of tax for schedular payments); and


(ii)
in relation to a sale, the net amount paid after subtracting from the purchase price all commission, insurance, freight, classing charges and other expenses incurred by the seller in connection with the sale; and



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#109 User is offline   Lupine 

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Posted 05 July 2018 - 04:28 PM

View PostGrant-Mac, on 05 July 2018 - 05:16 AM, said:

An analysis of section 221 ACA

A further issue that has arisen is how is this section to be correctly interpreted? Lupine in his reply [letter] correctly identifies the law for statutory interpretation. So, applying it we have:

The title: "Collection of levies by deduction from employee earnings". The plain meaning from the title are that levies are to be deducted from (a) earnings of (b] employees.

Subsection (1) has two subsections (a) and (b]. It is subsection (a) that concerns us. There is also a subsection (2). There is an issue here: how should these subsections be read? Are they to be read together or are they independent? In what order are they to be read?

My interpretation is that ss(1) is to be read first. It is numbered (1) and it directly addresses the purpose contained in the title. Second, ss(2) states that Schedule 4 applies to ss(1), which again requires that a deduction actually be made. Therefore ss(1) controls ss(2).

Grant


I read that as Section 221 (2) states that the definitions contained in Schedule 4 determine the application and interpretation of the requirements in S 221 ss (1).

Read together or independently the result is the same. Schedule 4 applies to all and any deduction considerations and contains all the definitions that apply which are wholly supported by Section 6 PAYE Income Payment.

Then there is also the fact having regard for the text and the purpose in Section 221 (1)(a) it is simply a statutory power that allows the Corporation to require all employers to levy all employees. It is not a consideration and so therefore needs no "interpretation"
There is no question for ACC to consider and what constitutes an employer and and an employee is determined by the Income Tax Act as ALL the applicable definitions in the AC Act stipulate. There is nothing for ACC to consider. Their current interpretation is wholly dependent on considerations that simply do not exist.

The Corporations first consideration goes to S 221 ss (2). That goes to Schedule 4 which controls S 221 ss (1)
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#110 User is offline   Alan Thomas 

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Posted 05 July 2018 - 04:35 PM

We must go back to basics and ask ourselves whether or not pecuniary advantages derived from schedular payments are something that has been generated from actual work task activities? If no actual work is being done for these types of payments then they are not earnings but rather simply income in which case we are looking at words that have a different meaning between ACC and IRD
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#111 User is offline   Lupine 

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Posted 05 July 2018 - 04:56 PM

Now to address the (or salary and wages as the case may require).

Section 221 and Schedule 4 also is concerned with the levying of shareholder employees. Shareholder employees can either take drawing OR and I do mean OR pay themselves Salary and Wages. Therefore it is wholly evident the wording in question is there to capture shareholder employees who pay themselves a Salary as IRD confirms.

http://www.ird.govt....y-yourself.html


If you're a company
A company is a business that is a legal entity in its own right, separate from its shareholders.

In a company structure shareholder-employees can:

  • periodically draw money from the company during the year. The amounts taken out are recorded in the shareholder current account as a loan to them. At the end of the tax year the company credits the current account with a salary amount calculated from the company profits which the shareholder will have to pay income tax on. This salary is declared on the their Individual income tax return (IR3), and is a deductible expense for the company.
  • be paid a regular salary (at least monthly) with PAYE deducted like a regular employee if an individual employment contract exists between the shareholder and the company. This salary or wage can be claimed as a deductible expense in the company's end of year return.
  • receive dividends from the company profits, once the tax on those profits has been paid.
Directors and management fees are also paid from the company profits. These can generally be included as a deductible expense in the company's end-of-year tax return.


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#112 User is offline   Alan Thomas 

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Posted 05 July 2018 - 05:12 PM

View PostLupine, on 05 July 2018 - 04:56 PM, said:

Now to address the (or salary and wages as the case may require).

Section 221 and Schedule 4 also is concerned with the levying of shareholder employees. Shareholder employees can either take drawing OR and I do mean OR pay themselves Salary and Wages. Therefore it is wholly evident the wording in question is there to capture shareholder employees who pay themselves a Salary as IRD confirms.

http://www.ird.govt....y-yourself.html


If you're a company
A company is a business that is a legal entity in its own right, separate from its shareholders.

In a company structure shareholder-employees can:

  • periodically draw money from the company during the year. The amounts taken out are recorded in the shareholder current account as a loan to them. At the end of the tax year the company credits the current account with a salary amount calculated from the company profits which the shareholder will have to pay income tax on. This salary is declared on the their Individual income tax return (IR3), and is a deductible expense for the company.
  • be paid a regular salary (at least monthly) with PAYE deducted like a regular employee if an individual employment contract exists between the shareholder and the company. This salary or wage can be claimed as a deductible expense in the company's end of year return.
  • receive dividends from the company profits, once the tax on those profits has been paid.
Directors and management fees are also paid from the company profits. These can generally be included as a deductible expense in the company's end-of-year tax return.




We must go back to basics and ask ourselves whether or not pecuniary advantages derived from schedular payments are something that has been generated from actual work task activities? If no actual work is being done for these types of payments then they are not earnings but rather simply income in which case we are looking at words that have a different meaning between ACC and IRD
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#113 User is offline   Grant-Mac 

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Posted 06 July 2018 - 05:28 AM

View PostLupine, on 05 July 2018 - 04:28 PM, said:



Read together or independently the result is the same. Schedule 4 applies to all and any deduction considerations and contains all the definitions that apply which are wholly supported by Section 6 PAYE Income Payment.




But that is not what subsection 221(2) states. What it states is:

Quote

(2)
Schedule 4 applies to any deduction under subsection (1), and applies to private domestic workers with any necessary modifications.


This means that you must work out your deduction first and then apply Schedule 4 to it. This gives a very different answer to the question asked.

Grant
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#114 User is offline   Grant-Mac 

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Posted 06 July 2018 - 05:56 AM

View PostLupine, on 05 July 2018 - 04:18 PM, said:


On the RD 8 issue that has been raised I answer as follows. As we can see below a schedular payment is a payment class as listed in schedule 4 of the IT Act. The IT Act Schedule 4 is solely concerned with the types of professions and industries all of whom fall into the definition of self-employed earners who are required by law to be paid taxed schedular payments. It also includes sales commissions as stated. RD 8 certainly excludes Salary and Wages which are described in RD5. Schedular Payments and Salary and Wage are listed as two distinct classes of PAYE earnings under RD 3. So therefore RD 3 itself informs us that they are two distinct classes. RD 8 supports this.

What RD 8 does NOT say or even imply is that Schedular Payments are not PAYE Income Payments. I invite anyone to point to me to the wording in RD 8 that even so much as touches on the matter. Schedule 4 of the AC Act requires that ACC levy ANY PAYE Income Payments. All the definitions that apply to RD 3. There is nothing to offer the Corporation relief in RD 8. It is totally irrelevant to the consideration.





The professions or jobs listed in Schedule 4 ITA do not exclusively apply to the self-employed. For example in Part D 2(e), there are [security] guards that are employees.Conversely, a Director qua Director being paid a fee is not an employee. The point is of this schedule is not to determine whether you are employed as an employee or self-employed. This schedule [appears] to be filling in the cracks [loopholes] where tax revenue might escape.

Its purpose is: if you receive a schedular payment within this schedule, what amount of tax you pay on it as PAYE.

For ACC purposes, the employee/self-employed question is addressed by either s221 or s222.

Grant
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#115 User is offline   Grant-Mac 

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Posted 06 July 2018 - 06:07 AM

View PostLupine, on 05 July 2018 - 04:56 PM, said:

Now to address the (or salary and wages as the case may require).

Section 221 and Schedule 4 also is concerned with the levying of shareholder employees. Shareholder employees can either take drawing OR and I do mean OR pay themselves Salary and Wages. Therefore it is wholly evident the wording in question is there to capture shareholder employees who pay themselves a Salary as IRD confirms.

http://www.ird.govt....y-yourself.html


If you're a company
A company is a business that is a legal entity in its own right, separate from its shareholders.

In a company structure shareholder-employees can:

  • periodically draw money from the company during the year. The amounts taken out are recorded in the shareholder current account as a loan to them. At the end of the tax year the company credits the current account with a salary amount calculated from the company profits which the shareholder will have to pay income tax on. This salary is declared on the their Individual income tax return (IR3), and is a deductible expense for the company.
  • be paid a regular salary (at least monthly) with PAYE deducted like a regular employee if an individual employment contract exists between the shareholder and the company. This salary or wage can be claimed as a deductible expense in the company's end of year return.
  • receive dividends from the company profits, once the tax on those profits has been paid.
Directors and management fees are also paid from the company profits. These can generally be included as a deductible expense in the company's end-of-year tax return.


If the shareholder-employee holds a contract of service, then yes, s221 applies. If the shareholder-employee holds a contract for service, then s222 applies.

Grant
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#116 User is offline   Grant-Mac 

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Posted 06 July 2018 - 06:13 AM

My question is how do you argue this point?

Quote

Earnings as an employee: what it does not include
(1)
Earnings as an employee, in relation to any person and any tax year, does not include—
(a)
any income-tested benefit, veteran’s pension, New Zealand superannuation, or schedular payment; or


You cannot simply ignore this section. One of the golden rules of law is that you can never ignore inconvenient law that impacts your position or argument.

Grant
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