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John Tamihere Does Not Face Any Tax Liability

22 December 2004

White Report Clears Tamihere

John Tamihere Does Not Face Any Tax Liability

John Tamihere today released his legal advice on tax matters as follows:

"It has been correctly reported that the White report cleared John Tamihere of any failure to pay tax on payments he received from the Waipareira Trust. Unfortunately there have also been some incorrect suggestions that John Tamihere may face some liability for the accidental omission of some payments in the tax returns filed by his accountant.

John Tamihere relied on the IR 12 Tax Certificate given to him at the end of the year by the Trust. He gave that return to his accountant and asked him to complete the tax return. That is entirely reasonable and is exactly what any other taxpayer would have done. Unfortunately, the Trust omitted the bonus from the IR 12 certificate and that omission was therefore carried through into John Tamihere's tax return.

There is no basis at all for the suggestion that John Tamihere breached his tax obligations in any way and the White report does not say that he did. The relevant issues noted in the report are:

- The payment of tax was the Trust's responsibility and not John Tamihere's.

- The Trust failed to include the bonus payment in the IR 12 certificate it prepared and, consequently, it was not included in John Tamihere's tax return

- John Tamihere's tax returns were completed and filed on his behalf by a chartered accountant

- John Tamihere was not aware that the IR 12 certificate was inaccurate. He simply relied on it in the same way that any other taxpayer would.

- John Tamihere did not benefit financially from the accidental omission and had no possible motive to do so deliberately

- As a PAYE taxpayer, John Tamihere was not required to file a tax return at all. He did so voluntarily

Part of the evidence considered by Mr White was a statement by Marsden Robinson, one of New Zealand's most experienced tax practitioners. Mr Robinson's conclusions are quoted briefly at para 6.22 of the White report. Mr Robinson's view was that:

"I would not expect an employee, in the normal course of events, ever to check the accuracy of an IR12 provided to him by his employer. Indeed, I cannot recall any client of mine ever doing so ¡K

In summary, I believe the conduct of Mr Tamihere and (his accountant) was reasonable and prudent and, in the case of Mr Tamihere, that he acted in the same way that I would expect most taxpayers to act in the circumstances."

A taxpayer does not commit an offence by accidentally omitting a payment from his tax return. That is only unlawful when it is done deliberately and knowingly.

There has nonetheless been some suggestion that it is possible that the Commissioner of Inland Revenue may take some action over the accidental omission of the bonus from John Tamihere's tax return. That is not correct and it is inconceivable that the IRD would take any action over a minor and accidental omission by an employee, which was caused by the employer's error. The White report itself refers to the possibility of any action by the IRD as "remote" (para 6.25)."


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