Thank you very much for your kind donation

July 17th, 2009 at 8:04 am by David Farrar

That is the theme song Bill English and Peter Dunne are probably humming to themselves, after the IRD won a court case with the BNZ, resulting in a judgement for the Crown of $645 million, and a potential precedent for the total $2.4 billion in dispute.

The decision will of course be appealed all the way to the Supreme Court, so Bill and Peter shouldn’t rush to the mailbox to look for a cheque.

With agency Fitch placing NZ on negative outlook, the Government will want all the money it can get. The potential downgrade reinforces how vital it is to keep the pressure on low quality spending to prevent a downgrade that will cost consumers, businesses and taxpayers. This shows how reckless Labour’s contnual demands for more spending are.

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31 Responses to “Thank you very much for your kind donation”

  1. philu (13,393 comments) says:

    dpf..as our situation gets worse and worse..with no end in sight..

    (and putting keys’ ‘the recession is over!’ comedy-routine yesterday to one side..eh..?..

    ..that’s one for the scrapbook..eh..?..

    ..and..

    ..that’ll teach him for just copying allan bollards comedy schtick..eh..?)

    ..what do you reckon the next excuse key will come up with for doing nothing..?

    (‘the national cycleway has now been downgraded to a bike-stand in ashburton’..pictures at six..!”)

    ..for continuing his (inevitably) doomed path of class-warfare/hooverism ?

    ..’one-term-john’..eh..?

    ..and all his own work..

    ..go figure..!

    phil(whoar.co.nz)

    [DPF: The PM is the most popular PM in the history of the polls. The right vs wrong direction question is about as strong as it ever gets at +40% - way more positive than Australia, US, UK and Canada. And Phil the great prophet is proclaiming a one term Government just as he proclaimed how Helen would destroy John Key in the 2008 election. I'd tell you not to give up your day job if you had one]

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  2. mickysavage (786 comments) says:

    Is it true DPF that the Cabinet wanted to settle this case for a quarter of the amount owing?

    Boy would that have been a dumb decision.

    This case makes the scuttling by the Nats of a select committee inquiry into the banks even more bizarre.

    [DPF: If the Cabinet wanted to settle, then I suspect they would have settled. Hilarious that the best you can dredge up is attacking the Govt for a hypothetical possibility]

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  3. Shane Pleasance (27 comments) says:

    1. So, tax cuts awry?

    2. Increased measures to take tax

    3. “Bank error probably not in your favour, please pay again.”

    And
    4. We shuffle along behind big brother Ozzie again on tax, on economy, on leadership

    Gee, Komrade Helen’s crooked teeth stated to look less unattractive…

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  4. reid (16,095 comments) says:

    I understand some are suggesting the banks should not appeal as a gesture of goodwill.

    Yeh right. Name another industry that willingly takes $2,400 million off their balance sheets.

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  5. Glutaemus Maximus (2,207 comments) says:

    Labour just love Visanomics.

    They do in the Uk, unless it is for defence spending. Loads of money for the Client State.

    Gordon’s ‘Golden Rule’ was that borrowings would never exceed 40% of GDP. To-day we hit 68.7%.

    Lying cheating scumbag, and he can only answer questions in Parliament with Tractor Statistics.

    NZ Labour would love to be as brazen.

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  6. Gooner (995 comments) says:

    Micky – do you know the difference between tax and mortgage interest?

    Thought not.

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  7. mickysavage (786 comments) says:

    Gooner

    “Micky – do you know the difference between tax and mortgage interest?”

    Sure do. A supposedly reputable business that engages in tax evasion to the degree shown in this case will surely be tempted to rort the analysis to justify unjustifiably high local interest rates. Maybe we should check just to make sure.

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  8. expat (4,048 comments) says:

    Who bailed the BNZ and then turned a blind eye to their associated party cook island tax dodges?

    Labour.

    Thank god the courts & the IRD have finally grown some nuts over the past 5 years this has been persued.

    mickey, your talking shit again.

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  9. mickysavage (786 comments) says:

    expat

    Labour started the case against the Banks and the IRD grew nuts because of Labour’s beefing up of the public service. Shame the IRD is being gutted and the staff slashed. The consequence will be that this sort of case will be less likely to occur.

    National was apparently going to cut the banks a sweetheart deal and forgive 3/4 of the debt. That is $1.6 billion, repeat $1.6 billion worth. That is the size of the last tax cut that we were personally promised by John Key but which he subsequently reneged on.

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  10. Peter (1,663 comments) says:

    “I’d tell you not to give up your day job if you had one”

    Classic.

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  11. mickysavage (786 comments) says:

    DPF

    “If the Cabinet wanted to settle, then I suspect they would have settled. Hilarious that the best you can dredge up is attacking the Govt for a hypothetical possibility”

    The source for my comment is you at http://www.kiwiblog.co.nz/2009/06/ird_vs_the_banks.html

    In particular:

    “I understand from informed sources close to one of the banks, that they have offered to settle the case for around $500 million. Informally it seems this was acceptable to Ministers, but that Crown Law was strongly against any settlement.”

    Given your links to the National Party and your comment about informed sources I would have rated the comment as more than a “hypothetical possibility”.

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  12. Chris Doms (73 comments) says:

    expat – This prosecution is ongoing from the Labour government.

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  13. expat (4,048 comments) says:

    1) labour have been ‘pursuing’ this case (for over 5 years), National are in power for a few months and its done.
    2) the banks try to broker a no fault settlement, that is not accepted, and the commies try to claim a back room deal was proposed by national.
    3) apparently the ‘gutting’ of the ird is based around the pr, media and comms teams, it projects being wound down and general attrition.

    you really are deluded broken arse commies

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  14. Gooner (995 comments) says:

    Micky, the select committee inquiry proposed by Cunliffe would have had terms of reference that enabled it only to inquire into floating rates offered by banks viz a viz the OCR. The committee accepted that medium to long-term fixed rates had to remain reasonably high because of deposit demand and also the banks’ necessity to fund these long term mortgages offshore where credit was very tight. The very narrow terms of reference proposed by your beloved Labour Party would have explicitly excluded tax avoidance and I even doubt the committee could have gone there anyway considering the matter was before the High Court.

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  15. Richard Hurst (796 comments) says:

    I was amazed to hear the BNZ rep on the news say they could ‘afford to pay this out of existing profits’. So, hard times for the ozzie banks eh?
    Now…about those interest rates….

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  16. Chris Doms (73 comments) says:

    expat: “1) labour have been ‘pursuing’ this case (for over 5 years), National are in power for a few months and its done.”

    It has been in the courts. It’s known as “due process” – are you familiar with it? Nothing to do with the Government, by the way. Once prosecution is underway (which happened under Labour) it’s a matter for the judicial process.

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  17. KiwiGreg (3,211 comments) says:

    Before you all get too excited this is only a High Court decision and, as has been pointed out, will be appealed (by either side) to the Supreme Court. No actual tax in dispute is likely to be paid by any of the banks until they finally lose. Which I expect they will.

    @Chris – it’s not a “prosecution” it is effectively a civil case.

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  18. peterwn (3,208 comments) says:

    KiwiGreg

    Nevis (Trinity) went all the way to the SC and still got thrashed. They were so scared of Venning J (the first instance judge) that they tried to have him recused (removed from the case) before he inflicted further carnage when dealing with costs.

    I am predicting BNZ will also get trounced in the SC too. Nevis is relevant to the BNZ case.

    There will be alot of belly button gazing as to when to pay up. Interest at a rate that would make Shylock blanch is compounding up and IRD can still inflict horrendouus penalties. This provides a mighty incentive to cough up.

    As far as BNZ’s offer was concerned, I think Ministers had an open mind on this until they received a very strong Crown Law report based on the Nevis SC outcome that said ‘we will win this one – don’t throw in the sponge now’.

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  19. Camryn (551 comments) says:

    With credit rating agency Fitch placing NZ on negative outlook…

    Just what the doctor ordered? From Bernard Hickey’s column at the NZH on July 14th:

    [Dr Bollard] is caught in a bind that can only be solved by one thing, which he appear to be hinting at in the part of the speech which wasn’t highlighted in the press release. That one thing is a credit rating downgrade. I suspect Dr Bollard wouldn’t mind too much if our credit rating was downgraded…

    http://blogs.nzherald.co.nz/blog/show-me-money/2009/7/14/stop-wagging-your-finger-and-start-hiking/?c_id=3&objectid=10584438

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  20. Chris Doms (73 comments) says:

    IRD could levy penalties as high as 100% of the total amount of tax outstanding (less interest). That would hurt.

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  21. freethinker (685 comments) says:

    Wonder if the banks are regreting the decision to stonewall on fixed rates?

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  22. gd (2,286 comments) says:

    On another tact will any heads roll at the BNZ Afterall individuals took a gamble with the law and lost.

    Not only that they attempted to defraud the taxpayers meaning all other taxpayers had to pay higher taxes to cover this amount.

    Now what about the corproate social responsbility of the banks directors CEO and senior management.

    Oh I forgot CSR isnt in the lexicon of either the legislators regulators or company directors in NZ.

    Until those with an interest in good corproate governance and who see good corproate governance as good for business and society can get the naysayers and ethical and moral pygmies to sign up then we will continue to see the bad bastards like the directors CEO and senior managers at BNZ trying to rort the good citizens.

    My suggested punishment would be to see the directors CEO and senior managers of the BNZ in some stocks at teh corner of Featherston St so we can throw rotten fruit and veges at them to signal our displeasure at their behaviour

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  23. Rex Widerstrom (5,327 comments) says:

    Sheesh, a greedy heartless government agency run by a Minister who’s nothing more than a cheap shyster versus a greedy heartless bank with (as expat notes above) a history of crooked tax dodging which is clearly also run by cheap shysters.

    Is it too much to hope that this ends in a draw whereby each destroys the other? :-D

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  24. Offshore_Kiwi (557 comments) says:

    OK, a couple of points:

    (1) what does this decision mean for Cameron Clyne (former CEO of BNZ now CEO of National Australia Bank)?
    (2) I wouldn’t crow too loudly; who do you think will be paying the bill? Here’s a hint: EVERY CUSTOMER OF EVERY ONE OF THE BANKS. This about that next time the OCR dips and the banks don’t drop their rates.
    (3) while you’re pounding the Aussie banks, have a think about what Kiwibank is doing. It doesn’t have to raise as much money offshore as the other banks, and it is able to use the government’s credit rating when it does raise cash. This means it can raise cash a LOT cheaper than the commercial competitors. KIWIBANK IS GOUGING ITS CUSTOMERS MUCH MORE THAN THE AUSSIE BANKS ARE!!! It has chosen a figure of 0.5%, which it thinks is enough of a gap from the other banks to make people think that Kiwibank is “keeping the Aussie bastards honest”. The rate is cozy, and the gap remains unchanged regardless of anything else that goes on. Kiwibank is, in fact, the biggest rip off from the wasted (Clark) years, with the possible exception of Cullen’s train set.

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  25. Ed Snack (1,793 comments) says:

    This is (of course) more complex than what some people want to assume. The Banks did have several high cost (let’s not confuse that necessarily with quality) legal opinions saying that what they were doing was legitimate, and in several almost identical transactions that actually had binding IRD decisions on the legality of said transactions. It all comes down to the reading of the intent of the law. Tax law has always had the “sham transaction” provisions, only it has been difficult for the IRD to get that label applied to transactions unless they were fairly obviously sham. It always struck me that the Banks were vulnerable on this front, but I would not have anticipated such a large shift in judicial opinion to occur so rapidly.

    It is no crime to structure one’s affairs to minimize the tax payable, provided of course that one does so legally. The fringes of this practice are always uncertain. Myself, I’ve always thought that these transactions were open to interpretation as purely tax driven, and I can’t say that the banks should be suprised. It does highlight the difficulties with complex taxation legislation. Keeping it as simple as possible is always a good rule of thumb.

    If I were the BNZ’s CEO, I’d recommend settling now, at anything up to 100% of the current outstanding amount. I think they’ll lose at the SC as well, and the interest compunds and there are penalties to negotiate away. It’s a distraction they don’t need.

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  26. Brian Marshall (194 comments) says:

    mickysavage (466) Vote: 1 19 Says:

    “July 17th, 2009 at 8:30 am
    Is it true DPF that the Cabinet wanted to settle this case for a quarter of the amount owing?
    Boy would that have been a dumb decision.”

    Micky, The minister is prevented from directing the Commissioner of Inland Revenue in the affairs of any indvidual tax payer by statue. s6b (2) Tax Administration Act 1994.
    I suggest you may want to check the reliability of anybody who told you the above.

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  27. expat (4,048 comments) says:

    ChrisDoms said:

    July 17th, 2009 at 9:58 am

    expat: “1) labour have been ‘pursuing’ this case (for over 5 years), National are in power for a few months and its done.”

    It has been in the courts. It’s known as “due process” – are you familiar with it? Nothing to do with the Government, by the way. Once prosecution is underway (which happened under Labour) it’s a matter for the judicial process.

    >> Oh come on, we all know that judicial independence in NZ under Labour wasnt worth the paper it was written on.

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  28. Anthony (785 comments) says:

    Ed I would suggest that a major reason tax law became so complicated is because in the recent past judges were very ready to give taxpayers the benefit of the doubt. We had a legacy of very high marginal tax rates under Muldoon of 66 percent so the judges of the recent past as high income earners earlier in their careers would have been mad not to have indulged in tax mitigation. My theory is that this made them sympathetic to taxpayers and arrangements to avoid tax.

    More recent judges have been through the Rogernomics revolution and understand that a flatter, fairer tax system is much better – but it still needs to be enforced. It’s a pity Roger couldn’t quite finish what he started and the fifth Labour government started taking us back down the road of higher marginal rates and a more complicated tax system.

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  29. mickysavage (786 comments) says:

    Brian Marshall

    “Micky, The minister is prevented from directing the Commissioner of Inland Revenue in the affairs of any indvidual tax payer by statue. s6b (2) Tax Administration Act 1994. I suggest you may want to check the reliability of anybody who told you the above.”

    It was DPF

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  30. expat (4,048 comments) says:

    ah. mickey the jobsworth tattle tale weasel mummies boy. fact.

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  31. Brian Marshall (194 comments) says:

    As I see further down Micky, but after it was too late to edit my post.
    Normally very reliable for his inside titbits.

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