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The Standard

Tough on tax cheats?

Written By: - Date published: 9:26 am, April 18th, 2013 - 51 comments
Categories: class war, national, tax, welfare - Tags: , , ,

Yesterday Brian Rudman asked why the government wasn’t chasing tax cheats with the same “enthusiasm” with which they were hounding beneficiaries. A dangerous question for the Nats, because it highlights all too clearly their prejudices and priorities. I wonder if that is why we got this hurried little press release later in the day:

Dunne: 1170 tax evasion cases for nearly $200m in two years

Inland Revenue successfully pursued 1170 cases for just short of $200 million in evaded taxes in the two years to June 2012, Revenue Minister Peter Dunne said today.

“I trust these figures will end the bizarre fiction from Labour that the Government is tough on welfare fraud, but soft on tax evasion,” Mr Dunne said.

Oh please. 1170 cases and $200 million is a tiny drop in the bucket. Half of NZ’s “super rich” dodge taxes. Tax cheats are costing the country up to $6 Billion per year (compared to around $39 Million for Welfare cheats).

Dunne’s big-sounding numbers represent only a tiny part of a huge problem. The government will be tough on tax evasion when it starts recovering a significant proportion of that (up to) $6 Billion. They’ll be treating welfare and tax cheats equally when they are treated equally in the courts, and treated equally in the extent to which they are hounded and demonised. Until that time, this government is tough on welfare cheats and soft on tax cheats, and they shouldn’t bother trying to pretend otherwise.

51 comments on “Tough on tax cheats?”

  1. ianmac 1

    Of course the super rich have the luxury of indulging in Tax Avoidance. It is legal you know, so says Mr Dunne. We cannot indulge in Tax Avoidance if we are on wages or Salaries though. And would the MPs declare Conflicts of Interest should a Bill limiting Tax Avoidance ever arise? Doubt it but the vote would be interesting. After Conflicts were declared there would be only 5 people left to pass such a law.

  2. Adrian 2

    But the best is the extra handout to private schools. A few years ago a young person of good left wing stock needed to attend a private “gurrls” school in Chch for a few months and while there did an informal, admittedly anecdotal, survey on how many of the parents were on a income dodge of one sort of another. She got 30%+ definites, about 15-20% probablies and a lot who wouldn’t say. Yeah, they really need the extra money.

  3. tamati 3

    I’m sorry, but just how is anyone able to accurately estimate the number of tax “cheats” out there?

    You don’t know what you don’t know right?

  4. weka 4

    Great article by Rudman (although he might want to do one about setting the media onto tax cheats as well as Bennett).

    This is a keeper:

    Victoria University tax lecturer Dr Lisa Marriott estimates that in 2011, tax evaders cheated the country of between $1 billion and $6 billion, while welfare fraud cost $39 million. She told 3 News: “The problem of tax evasion is at best-case scenario 25 to 50 times the financial amount of welfare fraud, and at worst-case scenario, potentially 100 to 150 times the amount.”

  5. It must also be remembered that usually when someone on welfare gets done for fraud they have to pay the entire welfare assistance back that they received over the time they were cheating the system, not simply the amount they cheated the system of. This means that the statistics of “savings” made to the NZ public through catching welfare fraud are in reality a lot lower.

    The cited “around 39 million” that benefit fraudsters are “costing” the country, is not what they are duping the system out of; that figure will be substantially less.

    Conversely, the estimated 6 billion that tax cheats are defrauding the country, is the estimated amount that they are defrauding the system. Unlike the beneficiaries, they are not required to pay the entire income that they received over the amount of time they were cheating the system. If they were, then there would be even more disparity between the numbers involved in benefit fraud compared to tax cheats.

    I suggest that the NZ government imposes the same rules for each type of fraudster. Require both to pay the entire income back over the time they have been defrauding the country, not simply the amount they have cheated.

    Thats fair isn’t it?

    • Raymond a Francis 5.1

      You obviously don”t know how the IRD works when it catches tax cheats
      http://www.ird.govt.nz/how-to/debt/penalties/criminal-penalties/

      You get caught and you pay and pay

      • blue leopard 5.1.1

        @Raymond A Francis

        Yes, you are correct I don’t know the penalties for tax avoidance.

        Thanks for the information.

        The page you link to indicates higher penalties than I was aware of, however there doesn’t appear to be anywhere on the page where a tax fraudster is required to pay back the entire income they received for the time they were defrauding the system.

        I believe this type of approach is one to put off people from attempting the activity.

        Most people in NZ would be stung pretty badly by a $25 000-50 000 fine, however the people with the most money, will not, yet these are the very people that should be being targeted.

        People with the most money are the ones that are creating skewed political decisions throughout the world and leading to things like The Global Financial Crises, and whom are profiting whilst everyone else is feeling negative effects of these skewed political decisions.

        Is there anything other than respect for ethical behaviour that would stop any of this behavior from occurring again?

        Nope

        (Noting that respect for ethical behaviour appears to be sorely lacking in those with powerful positions, in fact from recent examples provided by Our Leader, it seems likely that honesty and ethical behaviour “probably didn’t get multi-millionaires to where they are today”. I would guess such qualities are probably pretty uncool in such circles.)

        But no, keep on targeting beneficiaries, they are the REAL cause of societies problems…….yawn

        • Chris 5.1.1.1

          You don’t have to pay back the income (you didn’t defraud the state of the income).

          For avoidance on top of any fines you do have to pay back the tax shortfall – along with late payment penalties and interest.

          http://www.ird.govt.nz/how-to/debt/penalties/shortfall-penalties/sf-penalty-abusive.html

          For evasion it is the same except you have to pay 150% of the tax shortfall

          http://www.ird.govt.nz/how-to/debt/penalties/shortfall-penalties/sf-penalty-evasion.html

          Is that what you mean or are you trying to say they should forfeit any income they did actually earn for those years? Because as I said above they didn’t actually defraud the state of that income – they did however defraud the state of the tax on the income.

          If you want to argue the penalties should be harsher then fair enough but forfeiting any income would be too harsh in my opinion.

          • blue leopard 5.1.1.1.1

            The only reason I am talking about forfeiting income is that is what beneficiary fraudsters are required to do. Shouldn’t each case of fraud have the same penalty?

            There is a very easy way of not experiencing these penalties.

            Not defrauding the system.

            • Chris 5.1.1.1.1.1

              As far as I am aware all fraud is treated the same – you required to repay what you received fraudently.

              In the case of beneficiary fraudsters it is the income they received from the benefit that they were not entitled to. In the case of tax fraudsters it is the tax that they were required to pay but didn’t. Other fraud is pretty much the same as I understand it.

              • I asked someone who had been done for benefit fraud how they managed to clock up the amount that they were expected to pay back. They informed me that they were expected to pay back the benefit for the entire time that they had defrauded the system, not solely the amount they had “gained” by doing so. This would be the case for someone working part-time and not telling the department they were working these hours. They would still be entitled to a certain amount of assistance, however they would be expected to pay the whole amount of assistance they had received back.

                Perhaps things have changed, however this is what I understand to be the case.

                All fraud is not treated the same. It appears that more effort (and success) is being applied to people on benefits defrauding the system than other people defrauding the system of substantially more amounts. This is what this article conveys.

                • Chris

                  Sorry should’ve clarified – I was only talking about the financial punishment not the amount of effort going into following this up or jail time imposed.

                  Can’t really comment on the case you referred to, as I said that wasn’t my understanding of how it worked. I did try and look online and from what I could see they always try and recover the overpayment plus penalties, which is the same as tax cheats. Although to be honest the only sites I could find were the not the most reliable looking and I couldn’t find official advice either way.

                • Mary

                  I don’t think that is right. Only the amount that the person was not entitled to can be recovered. There have been cases where the Department of Social Welfare has tried to recover the gross amount before tax but the courts said no. There are also cases where the courts have said the amount the person is not entitled to must be offset by any other benefit the person was entitled to. You might be thinking of cases where Work and Income has imposed a monetary penalty for fraud, which can be done under section 86(2), up to three times the amount defrauded.

                  What’s really hideous about Borrows’ latest fraud bill is that partners of beneficiaries who’ve committed fraud can be convicted also, even if they don’t know about the offending!

                  • MrSmith

                    “What’s really hideous about Borrows’ latest fraud bill is that partners of beneficiaries who’ve committed fraud can be convicted also, even if they don’t know about the offending!”

                    I really think this is a bit of dog whistling from the Nats, it will never fly, on another angle, isn’t it your right not to take the stand against your partner? or am I thinking of American law.

                    • Mary

                      Yes, it is a dog whistle, but the Bill proposes a new offence where the partner or spouse of a beneficiary who has been convicted of benefit fraud or who’s had a penalty imposed for fraud can also be convicted if they’ve benefited either directly or indirectly from the fraud and that they’ve been “reckless” in regard to knowledge of the fraud. It means that the spouse or partner is criminalised under the new and separate offence even if they don’t know what their partner is doing is fraudulent. It’s not about giving evidence against your spouse, but it does ignore the principle that that restriction is based on which is that the criminal law should not interfere with the sanctity of marriage. It’s going to cause all sorts of trouble such as increased violence towards women, relationship break ups etc.

  6. DH 6

    Tax is an area where the political left need to get smart IMO. Take family trusts. They’ve been going so long now that every tax dodger has one. Not everyone who has a trust is a crook but every crook has a trust, right? So now that nearly every dodgy bastard in the country is corralled into the one pen it’s time to whack a 40-50% tax rate on the income of family trusts.

    Family trusts endow certain privileges on the beneficiaries of the trust. Those privileges are enabled by the state so beneficiaries should pay for the right to use them. User pays after all.

    I’d think very few people with family trusts vote for the left so it would be a nicely targeted tax that hit the tax cheats & white collar crooks where it hurts. Those honest people with trusts can unwind them without penalty if they don’t like the higher tax rate whereas the dishonest would face exposure of their true financial dealings if they unwind their trusts. They all walked into the trap willingly, now to close & padlock the gate.

    The best way to catch white collar crooks is to try & think like them ;-)

    • weka 6.1

      “I’d think very few people with family trusts vote for the left”

      Why on earth would you think that?

      My parents have a family trust. I don’t know why they set this up originally, but the most valuable thing about it has been to protect assets stripping by the govt should either of them require state care due to age/disability (likely). They consider their assets to be intergenerational ie they have received benefit from what their forebears did and they want to pass that on to subsequent generations. They are well off (freehold house, holiday house, some investments depleted by finance company collapse) but not massively rich. My mother votes on the left, I suspect my father swings between NZF and Labour (he would have voted National as a young man).

      They pay tax on income from the trust (likewise with other income above their super), so I’m not sure why you would perceive them as potential tax cheats. In all likelihood, if the govt hadn’t sought to asset strip elderly people (in part a Labour govt policy I believe) they probably wouldn’t have needed a trust.

      • DH 6.1.1

        “My parents have a family trust. I don’t know why they set this up originally, but the most valuable thing about it has been to protect assets stripping by the govt should either of them require state care due to age/disability (likely). ”

        So your parents, and you I might add if you’re a beneficiary, are gaining a financial benefit from being permitted by the state to have a family trust. Don’t you think they should be paying for that privilege? Why should they get benefits that people without trusts don’t get? What makes them more special than other people?

        There’s no tax on assets so I don’t really see your intergenerational argument, those assets can still be transferred tax free. It’s the income from assets that are taxed and income isn’t intergenerational.

        By ‘very few’ I meant as a proportion or percentage. There’s hundreds of thousands of family trusts so there will obviously be, number wise, a lot of left voters in that bunch.

        • ghostrider888 6.1.1.1

          Like the way you think DH; always thought “trust” was a rather ironic definition.

        • weka 6.1.1.2

          “So your parents, and you I might add if you’re a beneficiary, are gaining a financial benefit from being permitted by the state to have a family trust. Don’t you think they should be paying for that privilege? Why should they get benefits that people without trusts don’t get? What makes them more special than other people?”

          I’m a beneficiary, but not until they die, so in that sense I am not that much better off than if I were simply a beneficiary of their will (except for how the trust protects their money). Do I think they are more special? No. They’re just lucky to be well off. Do I think someone is special because they are allowed to save for their retirement and I am not? No. Do I think some very rich people are special because ACC doesn’t asset test, so very rich people get the same entitlements as very poor people? No.

          But I think you are blind in this instance to assume that all use of trusts creates iniquity.

          “There’s no tax on assets so I don’t really see your intergenerational argument, those assets can still be transferred tax free. It’s the income from assets that are taxed and income isn’t intergenerational.”

          The way I understand it is that if either of my parents require long term hospital care, then the govt would seek reimbursement via asset testing (as I say below, the rules have changed off and on). If the govt takes that money from my parents, it in effect makes more dependent on the govt. I’d rather be a beneficiary of my family than the govt, mostly because of the bene bashing culture that now exists, but I think it is fair to say that my forbears have paid tax with the belief that the govt would look after us when we needed it. That contract has been broken.

          You can read my comment below (reply to Ssssmith) for more on how I view fairness.

          • DH 6.1.1.2.1

            “But I think you are blind in this instance to assume that all use of trusts creates iniquity.”

            I haven’t said or made that assumption. I merely observed that people who create trusts do so to gain an advantage for themselves, and that since trusts are enabled & permitted by Govt I think it reasonable that trust users should pay extra for the privilege.

            But this has wandered off a bit. The intention wasn’t to criticise trusts as such but to make the observation that they have become a vehicle of choice for those who avoid tax. They’re also used by those who wilfully evade their debts, like the bankrupts who live the life of Reilly off the trust leaving a trail of unpaid debts behind them. They’re used to hide ill-gotten gains. They’re used to hide the real security holder & ownership of limited liability companies.

            In short trusts are being abused & exploited by crooks & people with questionable ethics, to the extent that IMO they’re doing far more harm than good. To that end I mused that there was an opportunity to turn it into an advantage, ie use the situation to identify & trap all the abusers and then deal with them appropriately.

            Keep in mind that my comments are directed at the topic of the thread (tax cheats), and my proposition that we need to think smarter on the issue.

      • joe90 6.1.2

        Paying for the care you receive is asset stripping and asking other tax payers to pay for the care you receive is protecting intergenerational wealth…….. petty bourgeoisie..

      • Descendant Of Sssmith 6.1.3

        What a load of tripe.

        The government of any type has continually increased the amount of assets you can keep, including adding things such as ten grand for pre-paid funerals.

        You can keep more assets now than you ever have been able to.

        When you go into rest home care you pay your fees to the rest home. You don’t pay your fees to the state and nor does the state take your money.

        What you are saying is that you want the state to pay for your private rest home care.

        You could of course look after your parents like many used to but nope don’t want to sacrifice to do that.

        The state will lend you the money via a caveat on your house – to pay for your private care – in certain circumstances where you might not want to sell the house eg other family members living in it but generally I would say if you are in a rest home you no longer need your house do you. Can’t live in two places at once.

        Reality is you the family strip your parents of their assets by not looking after them and having them go into private care. Lets not pretend that when you hand over money to a private business that the state is somehow taking it.

        The rest home is taking it, the rest home is asking it, the rest home is taking it.

        Hope that’s clear enough. Don’t like the fees take it up with the rest home. It’s called private enterprise.

        Got the money to pay then pay.

        For fucks sake your parents deserve to have good care in their last days – let them have it. It’s their money not yours. They have worked all their lives keep them in the best care they can have.

        Any kids with any decency would be saying to mum and day it’s your money you keep it.

        Man in some people the right wing meme of stand on your own two feet disappears quickly in this area.

        The first step to deal with ripping off the state with trusts would be to have a register of all primary beneficiaries of trusts, plus any secondary beneficiaries who have disbursement a paid.

        Annual returns of all disbursements to be filed.

        • weka 6.1.3.1

          Wow, so many assumptions in one comment.

          Of course it’s not my money, it’s my parents’ (technically). THEY are the ones who want to be able to leave some for subsequent generations, and THEY consider the money/assets to belong to the family intergenerationally. You think it is THEIR money, they don’t. I personally assume that it has nothing to do with me, but if there is money left at the end of their lives then I will be very fortunate. I am aware however of how this will impact on me. The idea that money/assets can only be owned individually is a nasty modern one. I know that previous generations in my family placed a value on looking after each other. In the past they did that themselves, in the past few generations it’s been done with accrued wealth. Personally I’d be happier with the old system, but that ship has well and truly sailed.

          I, and they, weren’t talking about private rest home care. They are quite capable of selling the house they live in to pay for that if the time comes. Personally, I believe that they would be better off paying for care in their own home, but it’s not my decision.

          The asset stripping I was talking about was for hospitalisation as an elderly person. The rules have been bounced around alot in the last decade or so (including how much can be transferred and who long it has to be transferred before it is exempt from the govt), but there was a time when they felt the need to protect their assets from the govt.

          As someone with a now permanent disability I am not in any position to look after my parents.

          As someone who was born into the middle classes but is now 2 decades into life in the underclass, I appreciate the great difficulty in creating fairness here. But I do know that when the govt looked at asset stripping the elderly, it looked to me like impoverishing subsequent generations.

          You have to understand here also, that I am legally not allow to save for my ‘retirement’. There are also gross structural inequities in many places in different systems in NZ. For instance, were I on a decent salary when I became disabled, if my disability was the result of an ‘accident’ I would be in a far better position financially than I am now. People with long term disabilities related to health are treated appallingly. I may as well have been thrown on the scrap heap.

          I also know many people in my situation who don’t have well off families and so I can understand why my situation seems unfair compared to them. IMO the solution is to give them better state support, and let my family support me as it can now and when the time comes.

          So, having said all that, you can now fuck off with your ableist and classist assumptions about me and what I was commenting. Next time try checking out things you don’t know instead of making assumptions.

          • karol 6.1.3.1.1

            Also, on the idea that people are less likely to look after their elderly parents at home – in my family, one of my grandparents and some of my great grandparents didn’t make it to their 60s – some were in their 60s when they died. When my father died, he was younger than I am now.

            People are living longer, and more are in need of professional care in their final years.

            • weka 6.1.3.1.1.1

              It’s also true that end of life disability has increased. My great grandparent’s generation all seemed to have died of things like heart attacks but were otherwise relatively healthy when they died. Some of them even just died of old age. Now it can be expected that many people will have many years with increasing levels of disability, and the difficulties that creates for care.

          • Descendant Of Sssmith 6.1.3.1.2

            What is the state care you refer to?

            If your parents are hospitalised in a public hospital there is no charge (though after 13 weeks any super or benefits will be reduced), if they need residential care for health reasons before the age of 65 it’s not income or asset tested, and if they need residential care after 65 it is income and asset tested but provided by the private sector and various residential trusts.

            http://www.health.govt.nz/our-work/life-stages/health-older-people/long-term-residential-care

            As far as I know the state no longer has long term geriatric wards where free care was provided.

            I’m always happy to be wrong but I can’t think of any public care for the elderly where you have to pay the state for your care.

            Also note while your comments generated my response the response was generic rather than aimed at specifically at you and I didn’t presume anything about your personal circumstances.

            and you did say “due to age/disability (likely). ” which doesn’t refer just to hospitalisation.

            The question of whether the state should provide long term geriatric care instead of subsidising such care by NGO’s and the private sector is a slightly different ball game as far as I am concerned and the trust issue is not relevant to that.

            You’ll note from the above link you have to be reasonably unwell to be eligible for any rest home care – there’s a medical assessment first and a income and asset assessment second.

            I’m not sure but maybe what you are saying is that once someone is unwell enough to require a level of care equal to hospitalisation then any income and asset testing should cease.

            Years ago I’m well aware that some hospitals had long term geriatric wards, as kids we used to visit them and keep the old people company, but as far as I know those in these wards had no means of support where they could have paid.

            If there are any situations where the state actually takes money to pay for care by the state I would be keen to hear about it. I genuinely can’t think of one that isn’t for non-residents.

            • weka 6.1.3.1.2.1

              “Also note while your comments generated my response the response was generic rather than aimed at specifically at you and I didn’t presume anything about your personal circumstances.”

              Perhaps you shouldn’t have used the word ‘you’ and ‘your’ so many times in your comment then. It looked pretty personally directed to me.

              I’m off to watch a movie, might try and pull out the relevant stuff tomorrow. All I know is that at the time they set up the trust, the govt was looking at asset testing. For a time the safety of a trust was removed I think, then put back with the five year proviso (if the money was in the trust for less than five years then the govt could still access it). I gave up following this some time ago for various reasons.

              WINZ also introduced scrutiny of trusts at that time, requiring them to be declared on forms.

              • weka

                And in case it makes the anti trust people feel better, if I inherit any money upon my parents’ deaths, WINZ will most likely take it off my benefit ie I will be expected to live off the inheritance until it is gone and then I can apply for entitlements again. Probably the only way around that would be to buy a house I intended to live in, or spend it really quickly. But like I say, mostly I just don’t think about it because it’s nothing to do with me unless it happens.

                • Descendant Of Sssmith

                  Another one of my bugbears – people conveying you have to have no assets to get a benefit. I have posted before about a union delegate who in the 80’s told people this with the result many. People spent all their redundancy needlessly.

                  Only what used to be called supplementary payments and emergency payments are asset tested.

                  The benefit whether it be unemployment, sickness, invalids, DPB is only income tested.

                  You can still get a benefit and have money in the bank. It’s the income off it that matters.

                  One of my neighbours just whittled away 20,000 + of his inheritance cause some one at WINZ told him he had to spend it after he was made redundant. Fortunately he spoke to me when his wife got sick and I was able to tell him it wasn’t true and he was able to go back and get it sorted out.

                  Please don’t perpetuate this notion that you have to have no money to get a benefit. You may not get as much if it is substantial but it’s the income tat matters.

                  • Descendant Of Sssmith

                    I could probably have said something like people instead of you but that does seem much clumsier.

                  • weka

                    Again with the assumptions.

                    Most people I’ve known on long term SB or IB rely on supplementary benefits to survive. So yes, assets are an issue in the context I was talking about.

                    I can’t survive on the base benefit alone, so my statement stands. If I inherit cash assets, WINZ will take a chunk of my benefit off me, forcing me to live off the cash asset until it is gone. Then I will have to reapply. It’s an asset stripping policy that impoverishes many long term beneficiaries with disabilities.

                    The asset limits are something like $1,000 for TAS/SNGs and $8,000 for AS.

            • joe90 6.1.3.1.2.2

              We’ve just finished wrapping up our parents estates.

              Dad’s estate was able to retain $160K plus $10K in funeral expenses and another $10K for every year that he was in care – a total of $230K to be disbursed.

              The balance of his estate was paid to the state.

              Because mum was never in care her estate was able to disburse the entire amount.

    • Chris 6.2

      If you honestly believe that all honest people with trusts can unwind them without penalty you do not understand the tax rules around the disposal of property work.

      In addition your solution to the trust problem exposes the fact that you don’t understand how trusts are used to avoid tax. Putting a 40-50% tax on trusts does nothing as trusts are already taxed at the highest rate. The avoidance (not always avoidance but anyway) that people use is to pay out distributions to each beneficiary – thereby utilising the lower marginal tax rates they have. Putting the trust rate up to 40-50% does nothing to stop this and solely penalises the more honest people who actually leave income in the trusts (to be taxed at the highest tax rate).

      Honestly it seems a lot of people don’t understand how trusts work at all – they simply know they are used for tax ‘avoidance’ and that is about it

      • DH 6.2.1

        I’m hardly going to write new tax legislation in a few paragraphs Chris. The catches you speak of can be fixed by the same Govt that sets tax rates. The laws covering trusts were enacted by Govt, Govt can change them.

        • Chris 6.2.1.1

          I’m aware you are not going to write tax legislation in a few paragraphs but what you were talking about shows a complete misunderstanding of the issue.

          I agree government can change them but the way to fix this issue if they wanted is reasonably simple and can be done by taxing all income received from trusts at 33% (as is currently the case for minors).

          • DH 6.2.1.1.1

            “what you were talking about shows a complete misunderstanding of the issue. ”

            Er, no. You haven’t really understood what I said. My argument was that family trusts can be viewed as a net that’s conveniently caught a large proportion of the fish that need to be caught. They even swam in willingly, couldn’t resist the bait. The idea is to keep them in the net while tightening the noose. The tricky bit is figuring out how to release all the innocent people from the net while keeping the big fish in it. Where there’s a will there’s a way….

            • Matthew Whitehead 6.2.1.1.1.1

              If income from trusts is taxed at the maximum individual rate, then there’s no longer any point using them to shelter income from tax. (The point of using the trust as a shelter is to pay out income to family members under the maximum rate, or to launder money for political donations)

              Add to that that political donations from trusts can only be made if the trust keeps a list of all contribitors to the trust and agrees to make it public, and then they’d actually be an honest mechanism- and all of the “innocent people” with trusts are using them to keep money without the complications of having it in their own bank accounts, so they probably won’t mind a little extra tax applying.

        • tamati 6.2.1.2

          The laws covering trusts are actually some of the oldest common law and were developed during the Crusades. The government has obviously modified some of the rules around Trusts and have clamped down pretty hard out those using them fraudulently. A trust can be easily broken up by the courts, if it is thought to be used fraudulently.

      • Descendant Of Sssmith 6.2.2

        The other thing of course is that the money is now the beneficiaries rather than the person who put the money in.

        The trustees have to look after the interests of the beneficiaries.

        If the beneficiaries are wider than the people putting the money in things can get a bit complicated as well – particularly if they are not co-operative in unwinding it.

        One of the reasons I get a bit tetchy about trusts is that I’ve seen quite a few parents and intellectually disabled dispossessed of their assets via trust mechanisms. Playing on the fears of the elderly that the state will take their money and having them set up completely unnecessary trusts just so the kids can have money has led to some horrible situations. You can’t escape the realisation that many of these trusts are simply the financial abuse of the elderly and the unwell.

        The lawyers and accountants get their fees though.

  7. Jasper 7

    Sentence – Daily Cost – Annual Cost
    Community Work – $7, – $2,484
    Supervision – $12, – $4,486
    Community Detention – $17, – $6,092
    Home Detention – $58, – $20,972
    Imprisonment – $249, – $91,000

    Blue-Collar versus White-Collar Offending
    Is benefit fraud similar to tax evasion?
    Benefit fraud is the act of receiving money from the state that one is not entitled to, whereas tax evasion is the act of not paying money to the state that one is obliged to. Both offences require deliberate planning and action. The victim in both cases is the same: the state, the taxpaying community, and society as a whole.
    Benefit fraud is also lower in financial terms than other fraud categories – averaging $67,000 per offender.
    One important difference remains: typically benefit fraud is committed by lower-income earners, whereas;
    Tax offences, particularly those that are prosecuted, differ with the degree of education, planning and deception required to commit these offences. Moreover, they are often undertaken by high-income earners.
    The range of tax fraud offending is within a range of $98,000 to $1,700,000.

    While there has been an overall trend away from custodial sentences, this does not appear to be visible in benefit fraud sentences. A majority of the benefit fraud offenders received a custodial sentence (60%).

    So Chester Burrows time to have a re-think of the current policy?? Send people to prison at an annual cost of $91,000 to the tax payer to recover/punish someone for $67,000 or less? Not rocket science.

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