My colleague hasn’t paid tax - do I have any recourse since I did? - Ask Susan

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My question surrounds declaring of overseas income. I arrived in NZ in 2006 and at that time there was a four-year grace period before having to submit an IR3 declaring overseas income.

After this period, I have submitted an IR3 every tax year declaring my overseas military pension as overseas income and paid tax on it. A colleague of mine in receipt of the same income who also arrived in 2006 did not declare it.

Due to them now applying for an NZ state pension, they have now declared this income but have only been required to pay back four years of tax with interest. My question is, do I have recourse to claim back from IRD given that I have paid my tax on this overseas income for the last 16 years whereby my colleague has only had to pay back the last four years having not declared it?

Deloitte tax expert Robyn Walker says this comes down to the tax system being based on voluntary compliance.

“People are expected to do the correct thing and to pay the appropriate amount of taxes. There are a wide range of penalty options which could apply in this circumstance.”

She said it’s interseting that you note IR only required four years’ worth of tax to be repaid, with interest.

“This is our ‘time bar’ rule which does limit how far Inland Revenue can got back in investigating the past. There is an exclusion for this rule if an entire source of income has not been declared - it’s possibly this technicality might have applied to this case.

“When assessing what penalties and interest are payable Inland Revenue needs to weigh up the integrity of the tax system. This can result in them waiving some penalties, or in this case agreeing to only look back a certain period.

There are two competing dynamics - on the one hand not being too lenient as to encourage non-compliance and for taxpayers to run the risk of being caught; and on the other, so being so heavy-handed that taxpayers will consider not fessing up if they discover a mistake in the future.”

So I’m sorry, the answer here is that although it’s very frustrating, in this case you’ve only got the moral high ground as a benefit.

After much deliberation this year and a lot of research, I finally took a leap of faith and transferred my managed KiwiSaver to Kernel Wealth. The official transfer took two weeks and landed in my Kernel KiwiSaver on Monday this week.

Within one day the balance dropped $209. Then today it dropped $325, but there were contributions deposited which bought the balance back up to the amount that was transferred.

When I queried it with Kernel, they said this was normal with markets. I do realise there are fluctuations. I am contemplating on transferring it back, as I have never seen such a significant drop. Should I hold out?

Yes, I think you should. If you’ve made your decision based on sound reasoning, it’s generally worth sticking with it when it comes to KiwiSaver.

Dean Anderson, the founder of Kernel, said he appreciated the trust you put in him when you moved your money across.

“First, what you’re experiencing is completely normal,” he said.

“This past week has been choppy for markets globally - down 1 percent, up 1 percent, repeat. In fact, overnight on Friday the S&P 500, Global 100, and NZ equities all [went] up over 1 percent.

These day-to-day moves can feel unsettling, especially when you’re watching a balance you’ve worked hard to build. But those short-term swings are the price of long-term investing - and the data is clear that trying to time your way around them costs more than it saves.

“Here’s what matters: if you were in a high growth fund before, your previous provider almost certainly had the same week. What we focus on at Kernel - and what we’d encourage you to focus on too - are the things that actually drive long-term outcomes: low fees, proper diversification, and staying invested through the noise rather than reacting to it.”

He said Kernel doesn’t provide advice but the team is there to help if you have concerns.

I generally think that not checking your KiwiSaver balance too often is the best approach, provided you don’t need the money soon.

I was given a gift voucher from a local shop for a Christmas present and the expiration date was recorded as “no expiry date”. Less than a month after Christmas there was a devastating fire in our area and we were significantly affected, so spending my voucher was not a priority (especially as it did not expire).

About a year or so later I visited the shop and looked at what I might buy - and mentioned to the assistant that I had a voucher and she said, “Oh that’s good, because they never expire”. But when I presented the voucher recently they declined to honour it saying it was more than two years old and the shop had changed hands twice and they were not required to honour it.

I said surely the gift vouchers would have been included in the assets and liabilities of the company when the business was bought - the owner said no they weren’t. So - are gift vouchers recorded in assets and liabilities, and is it true that even though it says no expiry date the two-year limit does apply?

As of March this year, vouchers aren’t allowed to have an expiry date that’s any sooner than three years from when they were issued.

That doesn’t apply retrospectively, though.

When businesses change hands, the new owner sometimes absorbs the liabilities and assets of the previous owner, which can mean they take on the obligation to honour gift cards. But it doesn’t always happen. The new owners might have only bought the physical assets, even if they’re continuing to trade under the same name.

Consumer NZ advises that you might be out of luck here.

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