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IRD and backdated ERC payout

#1 User is offline   Tish 

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Posted 14 September 2019 - 02:03 PM

I am having difficulty wrapping my head around IRD and taxation with regard to a backdated ERC payout.

I get IRD requiring top tax level for a very substantial sum when it is received, but I don't get why the payout isn't recalculated at the end of the tax year to reflect the number of tax years the payout covers, re-calculate each tax year as a standalone period and only require the tax appropriate to each tax year separately.

IRD insist that, despite the payout covering 5 tax years, the full taxation taken now at payout time will stand and they don't retrospectively recalculate a backdated sum to deal with each period as a separate year and refund to that level for each one.

That sort of messes with my head. Has anyone had such a case to comment on a course we can take at the end of this financial year to have each year calculated and taxed separately and the difference refunded? It's a shitload of extra tax. Any Act documentation that deals with this specifically? Do I get an accountant to sort it and would an accountant know how?

Ta

PS yes, after nearly 5 years, failed Review and a dickhead "advocate", better DC results and lots more faffing by ACC continuing to attempt to weasel out we have finally been successful. Just have to get past this IRD tax rort now...
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#2 User is offline   tommy 

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Posted 14 September 2019 - 06:27 PM

View PostTish, on 14 September 2019 - 02:03 PM, said:

I am having difficulty wrapping my head around IRD and taxation with regard to a backdated ERC payout.

I get IRD requiring top tax level for a very substantial sum when it is received, but I don't get why the payout isn't recalculated at the end of the tax year to reflect the number of tax years the payout covers, re-calculate each tax year as a standalone period and only require the tax appropriate to each tax year separately.

IRD insist that, despite the payout covering 5 tax years, the full taxation taken now at payout time will stand and they don't retrospectively recalculate a backdated sum to deal with each period as a separate year and refund to that level for each one.

That sort of messes with my head. Has anyone had such a case to comment on a course we can take at the end of this financial year to have each year calculated and taxed separately and the difference refunded? It's a shitload of extra tax. Any Act documentation that deals with this specifically? Do I get an accountant to sort it and would an accountant know how?

Ta

PS yes, after nearly 5 years, failed Review and a dickhead "advocate", better DC results and lots more faffing by ACC continuing to attempt to weasel out we have finally been successful. Just have to get past this IRD tax rort now...

seek professional advice ,,,,,,,,,,,,,, as in such matters , as there can be accumulation of arrears that are all combined in one tax year ,,,,,,,,,,,,,and such at a the maximum taxation rate ,,,,,,,,,,,,,,
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#3 User is offline   Tish 

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Posted 14 September 2019 - 08:03 PM

View Posttommy, on 14 September 2019 - 06:27 PM, said:

seek professional advice ,,,,,,,,,,,,,, as in such matters , as there can be accumulation of arrears that are all combined in one tax year ,,,,,,,,,,,,,and such at a the maximum taxation rate ,,,,,,,,,,,,,,


Thanks Tommy, that is what has been done because ACC pay it as a one off payment. Now I need to know who to consult to achieve a substantial chunk of tax back :-)
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#4 User is offline   Huggy 

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Posted 14 September 2019 - 09:06 PM

Mini would be a good person to provide information if she sees this post, however, from what I understand you can ask IRD for a special tax code that you have to provide to ACC who will then tax you at a lower rate.

Call IRD and ask is there a special tax code that you can get for this lump sum of 5 years, explain it to them and let them advise you on this matter.

I also understand that even if at the special tax code you are still over taxed, that you can approach ACC and ask for a payment outside of legislation to cover the tax losses.
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#5 User is offline   Tish 

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Posted 14 September 2019 - 11:15 PM

View PostHuggy, on 14 September 2019 - 09:06 PM, said:

Mini would be a good person to provide information if she sees this post, however, from what I understand you can ask IRD for a special tax code that you have to provide to ACC who will then tax you at a lower rate. They did not offer to use a special tax code, it was either full now or a lower income one and pay up the rest when the tax year ends.

Call IRD and ask is there a special tax code that you can get for this lump sum of 5 years, explain it to them and let them advise you on this matter.

I also understand that even if at the special tax code you are still over taxed, that you can approach ACC and ask for a payment outside of legislation to cover the tax losses.


I did call IRD before the payment was made as ACC wanted to know the correct code to use. IRD said they wouldn't re-adjust the tax paid as annual tax take retrospectively because they just don't do that and it would be taxed as a one off extra income because it all arrived in one payment and that if the full tax wasn't paid now, a big tax bill would be payable at the end of the tax year.

Now the tax has been taken, the money has been deposited and at the end of the year, I want IRD to recalculate each tax year as a separate taxable period and refund the difference in tax paid. It is double tax, after all. The income rate is known, the ERC now in place shows it and what the back pay was calculated on over each year so there is no reaosn for IRD not to know what how much to tax in each period, and each period to do it in.

During the period of incapacity, MSD kept him alive, he paid tax on his benefit and his tax was done automatically each year by IRD. Now MSD have been paid back, I guess tax paid has been paid back to IRD and his backpay replaces each tax period with a bit of extra income in year 1 (wages) and year 5 (new ERC).
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#6 User is offline   spacefish 

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Posted 15 September 2019 - 12:50 PM

IRD tax payments in the year the payment is received (not the same as time of entitlement) so it is IRD your battle is with. However where ACC have screwed up you can request a ex gratia payment or Payment outside of Scope of Statutory Entitlement. See the following FYI OIA Request, scroll through towards the end.

https://fyi.org.nz/r.../3/Response.pdf
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#7 User is offline   Tish 

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Posted 15 September 2019 - 01:39 PM

View Postspacefish, on 15 September 2019 - 12:50 PM, said:

IRD tax payments in the year the payment is received (not the same as time of entitlement) so it is IRD your battle is with. However where ACC have screwed up you can request a ex gratia payment or Payment outside of Scope of Statutory Entitlement. See the following FYI OIA Request, scroll through towards the end.

https://fyi.org.nz/r.../3/Response.pdf


But is it ACC that have messed up or is it IRD?

IRD had a copy of the ACC1566 form to refer to when she was talking to me, and she said we should choose either of the first two options on that form, or ask ACC to redo the payment to cover each period which I am pretty sure from past case manager contact they don't do. Options IRD gave me based on the ACC1566 form were highest rate - 34.39%, or the current usual lower tax rate with a big tax top up next year. The third option, an IR23 special tax code or deduction rate wasn't offered.

So we chose the bulk tax now.

But somewhere is the calculation for tax paid by MSD as part of the benefit and we don't yet have an accounting of what process has been applied to that.

I will have to engage a good accountant with appropriate experience to review this entire process and investigate the tax position as of now and what the next step will be at the end of the tax year with regard to how the process might be ammended. I'll offer that FYI document about payment outside the scope of statutory entitlements then for use as appropriate with his guidance.

Thanks
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#8 User is offline   Alan Thomas 

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Posted 15 September 2019 - 03:23 PM

View PostTish, on 14 September 2019 - 02:03 PM, said:

I am having difficulty wrapping my head around IRD and taxation with regard to a backdated ERC payout.

I get IRD requiring top tax level for a very substantial sum when it is received, but I don't get why the payout isn't recalculated at the end of the tax year to reflect the number of tax years the payout covers, re-calculate each tax year as a standalone period and only require the tax appropriate to each tax year separately.

IRD insist that, despite the payout covering 5 tax years, the full taxation taken now at payout time will stand and they don't retrospectively recalculate a backdated sum to deal with each period as a separate year and refund to that level for each one.

That sort of messes with my head. Has anyone had such a case to comment on a course we can take at the end of this financial year to have each year calculated and taxed separately and the difference refunded? It's a shitload of extra tax. Any Act documentation that deals with this specifically? Do I get an accountant to sort it and would an accountant know how?

Ta

PS yes, after nearly 5 years, failed Review and a dickhead "advocate", better DC results and lots more faffing by ACC continuing to attempt to weasel out we have finally been successful. Just have to get past this IRD tax rort now...


The correct process is to sue the ACC for the losses caused by their incompetence.
Everyone knows that once it is established that someone has caused financial losses they become liable for those losses.
Don't get suckered into some airy fairy nonsense invented by those who seek to cover over the ACC staff incompetence and their liability to make good.


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#9 User is offline   Alan Thomas 

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Posted 15 September 2019 - 03:25 PM

View Postspacefish, on 15 September 2019 - 12:50 PM, said:

IRD tax payments in the year the payment is received (not the same as time of entitlement) so it is IRD your battle is with. However where ACC have screwed up you can request a ex gratia payment or Payment outside of Scope of Statutory Entitlement. See the following FYI OIA Request, scroll through towards the end.

https://fyi.org.nz/r.../3/Response.pdf


There is never an entitlement not to pay tax because of an error of someone not on the tax department.
It is ACC that have caused or triggered the extra tax payment at the higher rate so it follows that ACC are required to ensure that you do not suffer from their mistake.

Any other approach to this fundamental problem is sheer lunacy as it sets out to disguise the ACC's bad behaviour.

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#10 User is offline   Alan Thomas 

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Posted 15 September 2019 - 03:27 PM

View PostTish, on 15 September 2019 - 01:39 PM, said:

But is it ACC that have messed up or is it IRD?

IRD had a copy of the ACC1566 form to refer to when she was talking to me, and she said we should choose either of the first two options on that form, or ask ACC to redo the payment to cover each period which I am pretty sure from past case manager contact they don't do. Options IRD gave me based on the ACC1566 form were highest rate - 34.39%, or the current usual lower tax rate with a big tax top up next year. The third option, an IR23 special tax code or deduction rate wasn't offered.

So we chose the bulk tax now.

But somewhere is the calculation for tax paid by MSD as part of the benefit and we don't yet have an accounting of what process has been applied to that.

I will have to engage a good accountant with appropriate experience to review this entire process and investigate the tax position as of now and what the next step will be at the end of the tax year with regard to how the process might be ammended. I'll offer that FYI document about payment outside the scope of statutory entitlements then for use as appropriate with his guidance.

Thanks


Just because someone offers you to different choices does not mean that the proper choice and choice that you are entitled to have this to place the burden on those who caused the problem, which in this case is the ACC. Obviously the ACC are not going to volunteer any information at all that is gonna cost them money.
Simply write to the ACC and ask them the difference between your tax liability that they would have had to pay if they did not make the mistake as opposed to what is being charged now and ask them to provide you with funding to make up the difference. Provide your bank account number with your correspondence. It's not more complicated than that

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#11 User is offline   Tish 

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Posted 15 September 2019 - 04:12 PM

View PostAlan Thomas, on 15 September 2019 - 03:27 PM, said:

Just because someone offers you to different choices does not mean that the proper choice and choice that you are entitled to have this to place the burden on those who caused the problem, which in this case is the ACC. Obviously the ACC are not going to volunteer any information at all that is gonna cost them money.
Simply write to the ACC and ask them the difference between your tax liability that they would have had to pay if they did not make the mistake as opposed to what is being charged now and ask them to provide you with funding to make up the difference. Provide your bank account number with your correspondence. It's not more complicated than that


That's why I think an accountant familiar with these situations will be able to advise any point where the IRD is wrong, which leaves any other errors in ACC's field of cock up. I will have to work out exactly how I address that with ACC once I know where they are in error, and when they have provided a full breakdown of all elements of the payment and all deductions. We don't have that yet.

I have also wondered about the interest on back dated ERC claim sum with regard to time when the Corporation had the information necessary to accept the claim, even though they chose not to, which in this case was the Review as no further explanatory information was asked for, nor supplied TO ACC after that date with relevance to acceptance of the claim. Everything after that date was Court submissions, Judge's Decision and a last kick in the arse in a OIA Request that required they state any further detailed information provided to ACC after closing of Court submissions that would advise their tox panel during their review of the Decision, other than they already had been provided prior that had been dismissed by the court. After they that, suddenly the Decline very quickly became Accept.
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#12 User is offline   tommy 

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Posted 15 September 2019 - 04:49 PM

View PostTish, on 15 September 2019 - 04:12 PM, said:

That's why I think an accountant familiar with these situations will be able to advise any point where the IRD is wrong, which leaves any other errors in ACC's field of cock up. I will have to work out exactly how I address that with ACC once I know where they are in error, and when they have provided a full breakdown of all elements of the payment and all deductions. We don't have that yet.

I have also wondered about the interest on back dated ERC claim sum with regard to time when the Corporation had the information necessary to accept the claim, even though they chose not to, which in this case was the Review as no further explanatory information was asked for, nor supplied TO ACC after that date with relevance to acceptance of the claim. Everything after that date was Court submissions, Judge's Decision and a last kick in the arse in a OIA Request that required they state any further detailed information provided to ACC after closing of Court submissions that would advise their tox panel during their review of the Decision, other than they already had been provided prior that had been dismissed by the court. After they that, suddenly the Decline very quickly became Accept.

to go down the road , as in allans suggest, is a costly exercise , persue the simples first ,,,,,,,,,,which then seek a competent , person on such matters ,,,,,,, it may be a small cost for a worthwhile return ,,,,,,,,,,,,, B)
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#13 User is offline   tommy 

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Posted 15 September 2019 - 05:00 PM

View Posttommy, on 15 September 2019 - 04:49 PM, said:

to go down the road , as in allans suggest, is a costly exercise , persue the simples first ,,,,,,,,,,which then seek a competent , person on such matters ,,,,,,, it may be a small cost for a worthwhile return ,,,,,,,,,,,,, B)/>

but of course , the indvidual , will want as slice of the arrears ,, as in a percentage ,,, be aware of how the system works ,,,,,,,,, B)
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#14 User is offline   Alan Thomas 

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Posted 25 September 2019 - 04:32 PM

View PostTish, on 15 September 2019 - 04:12 PM, said:

That's why I think an accountant familiar with these situations will be able to advise any point where the IRD is wrong, which leaves any other errors in ACC's field of cock up. I will have to work out exactly how I address that with ACC once I know where they are in error, and when they have provided a full breakdown of all elements of the payment and all deductions. We don't have that yet.

I have also wondered about the interest on back dated ERC claim sum with regard to time when the Corporation had the information necessary to accept the claim, even though they chose not to, which in this case was the Review as no further explanatory information was asked for, nor supplied TO ACC after that date with relevance to acceptance of the claim. Everything after that date was Court submissions, Judge's Decision and a last kick in the arse in a OIA Request that required they state any further detailed information provided to ACC after closing of Court submissions that would advise their tox panel during their review of the Decision, other than they already had been provided prior that had been dismissed by the court. After they that, suddenly the Decline very quickly became Accept.


To get the proper understanding with regards to legal criteria in these matters you really need to Inc in terms of judicial review as the ACC legislation simply does not cover the scenario that you have described.
One thing is for certain there is absolutely no possibility that the ACC can even entertain any thoughts about coming to some kind of arrangement with IRD or any other kind of other jiggery pokery. Put simply ACC become liable for any kind of losses that they have caused and must reimburse those losses to you, including interest on the money that you should have had. Keep in mind that it is in the ACC's interest to make mistakes and make late payment so they can benefit from your money and make interest on that money and no doubt do.

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#15 User is offline   Tish 

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Posted 25 September 2019 - 08:23 PM

While the forum has been offline I have consulted an accountant, who consulted another accountant who specialises in such things and got back to me to confirm there is no way around this issue via IRD. So once I have done all the maths again, rechecked the numbers and worked out the tax over payment reasonably accurately I will file a claim for Payment outside of Scope of Statutory Entitlement.

Then I will see about the issue of interest on the total sum.

Nothing to lose at this point.

Thieving pricks everywhere you look.
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#16 User is offline   Alan Thomas 

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Posted 26 September 2019 - 11:01 AM

View PostTish, on 25 September 2019 - 08:23 PM, said:

While the forum has been offline I have consulted an accountant, who consulted another accountant who specialises in such things and got back to me to confirm there is no way around this issue via IRD. So once I have done all the maths again, rechecked the numbers and worked out the tax over payment reasonably accurately I will file a claim for Payment outside of Scope of Statutory Entitlement.

Then I will see about the issue of interest on the total sum.

Nothing to lose at this point.

Thieving pricks everywhere you look.


your approach is absolutely correct in accordance with the legislation.
However ACC will think that they are using their discretion by ignoring your request and a discretionary payment outside of the scope of statutory entitlement is not reviewable.
However there is a statutory entitlement that you must be paid the correct amount and that ACC cannot create a situation whereby you suffer any losses at their hand. This might be reviewable to open the way to a review hearing and then access through to the courts. I'm not sure what caselaw exists regarding this approach. If you have no legal access of enforcement under the ACC legislation you always able to address this matter by way of judicial review.
it does come to judicial review you would be doing your fellow man a service by creating a precedent thus bring about an end to the ACC fabricating delays in payment and taking advantage of all of this money for them to generate interest at our loss.

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#17 User is offline   Tish 

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Posted 26 September 2019 - 01:58 PM

View PostAlan Thomas, on 26 September 2019 - 11:01 AM, said:

your approach is absolutely correct in accordance with the legislation.
However ACC will think that they are using their discretion by ignoring your request and a discretionary payment outside of the scope of statutory entitlement is not reviewable.
However there is a statutory entitlement that you must be paid the correct amount and that ACC cannot create a situation whereby you suffer any losses at their hand. This might be reviewable to open the way to a review hearing and then access through to the courts. I'm not sure what caselaw exists regarding this approach. If you have no legal access of enforcement under the ACC legislation you always able to address this matter by way of judicial review.
it does come to judicial review you would be doing your fellow man a service by creating a precedent thus bring about an end to the ACC fabricating delays in payment and taking advantage of all of this money for them to generate interest at our loss.



Thanks for that. I'll start combing the Act, and haunting nzlii again for precedent. I'll probably almost be done when they try to kick him off ERC and into a job he can't possibly do and the shitfest will begin all over again.
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#18 User is offline   tommy 

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Posted 26 September 2019 - 04:02 PM

View PostAlan Thomas, on 25 September 2019 - 04:32 PM, said:

To get the proper understanding with regards to legal criteria in these matters you really need to Inc in terms of judicial review as the ACC legislation simply does not cover the scenario that you have described.
One thing is for certain there is absolutely no possibility that the ACC can even entertain any thoughts about coming to some kind of arrangement with IRD or any other kind of other jiggery pokery. Put simply ACC become liable for any kind of losses that they have caused and must reimburse those losses to you, including interest on the money that you should have had. Keep in mind that it is in the ACC's interest to make mistakes and make late payment so they can benefit from your money and make interest on that money and no doubt do.
that as you mentioned allan is the point ..as in what is legally owed to a claimant as in arrears , and such seek competent advice ,,,,,,,, as in the which acc mathematics are established , but the claimant must be aware of whom can double dip ,,,,,,,,,,at the claimants expense also ,,,,,,,,,,,,,,,,,not easy
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#19 User is offline   tommy 

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Posted 26 September 2019 - 04:09 PM

View Posttommy, on 26 September 2019 - 04:02 PM, said:

that as you mentioned allan is the point ..as in what is legally owed to a claimant as in arrears , and such seek competent advice ,,,,,,,, as in the which acc mathematics are established , but the claimant must be aware of whom can double dip ,,,,,,,,,,at the claimants expense also ,,,,,,,,,,,,,,,,,not easy

BTW any advancements allan as in your acc related matters of erc workers compo being restored ,,,,,,,,,,,,,, :rolleyes:/>
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#20 User is offline   tommy 

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Posted 26 September 2019 - 04:26 PM

View PostTish, on 25 September 2019 - 08:23 PM, said:

While the forum has been offline I have consulted an accountant, who consulted another accountant who specialises in such things and got back to me to confirm there is no way around this issue via IRD. So once I have done all the maths again, rechecked the numbers and worked out the tax over payment reasonably accurately I will file a claim for Payment outside of Scope of Statutory Entitlement.

Then I will see about the issue of interest on the total sum.

Nothing to lose at this point.

Thieving pricks everywhere you look.

, and as you mentioned thieving etc , this is whom presents figures, maths , first as such related payouts , and then the claimant to challenge the correct payout etc ,,,,,,,,nothing has changed , apart from greed ,,,,,,,,,,,,,,, as in monopoly controls , :rolleyes:/>
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