By MARY HOLM
Q. I lost money in shares of Fortex in 1994, as would have many others, as strong financial statements were coming from the company before it went into receivership. Now I see a newspaper announcement that a $36 million claim against Pricewaterhouse, the company's auditor, has been settled before an expected four-month court case.
Does this mean the shareholders will get some money back now, after being deceived?
If not, why not? I remember the director receiving a jail term, but that did not help shareholders who had been duped.
A. Sorry, but there's no money in it for shareholders.
When a company goes into receivership a whole line-up of people - including the receivers, Inland Revenue, employees owed wages and holiday pay, secured creditors and unsecured creditors - get their money before shareholders get a cent.
Fortex receiver Alan Isaac, who is national chairman of KPMG, says the claim you mention was raised to $145 million, but the settlement amount is confidential.
Regardless of how much it was, it wasn't enough to fully pay the secured creditors, he says.
Those creditors, which include some superannuation funds, did get some money, though. "There are mums and dads who will benefit. Their superannuation funds held some Fortex securities."
Beyond that, even unsecured creditors got nothing, let alone shareholders.
As you say, Fortex chief executive Graeme Thompson and chief financial officer Michael Mullen were jailed for fraud. As you also say, that doesn't do the shareholders much good.
That's the downside of investing in shares. You win big if the company does well, but stand to lose the lot if it fails.
Because of that possibility, it's not wise to put too much money in any one share. But you don't need me to tell you that now.
Q. I recently spent a considerable amount of time completing my IR3 tax return. My income consists of wages, rent, interest and dividends.
Confident that I had calculated the amount of my refund correctly, I sent off the return and awaited a refund of $923.11.
Amount of the refund I received? $210.81.
I rechecked my calculations and couldn't find any reason for the reduced refund. I rang the IRD. "Common error," the young woman informed me. I had claimed a credit for the total PAYE deducted from my wages.
"Isn't that what I should be claiming?" I asked her. No, was the response, I should have first deducted the ACC premium, which is included in the PAYE deductions.
Fair enough, but the problem is that the amount of the ACC premium included in the PAYE deductions is not shown on the summary of earnings. My summary - and I presume they are all the same - shows only two amounts, total income and PAYE deductions.
How can anyone complete a tax return accurately when the summary of earnings (supplied by the IRD) is not correct?
A. You've fallen into a trap that has caught several people this year, says Inland Revenue.
In the past, on the IR12s you were given your pay deductions both including the ACC levy and net of that levy.
Now, on the summary of earnings, you get only the inclusive figure. The IR3 guide tells you how to calculate the net figure yourself. You seem to have overlooked that.
The IRD says its computers will catch the error, as it did in your case.
A spokesman says the department doesn't like to see people getting a smaller refund than expected, or even finding they unexpectedly owe tax. "It doesn't make them too happy."
He says the IRD plans to make all this easier next year.
Q. With reference to the info on tax return errors (Money Matters, July 1), what about the bigger, less obvious error in the IR3 and the guide?
On page 15 the guide explains that, for the first time, I am to calculate my own ACC earner premium using the table on page 16.
I then subtract that calculated earner premium from my PAYE deductions and show the amount in box 11E on the IR3.
Problem is, I have already paid my ACC earner premium, as it was deducted from my wages during the year by my employer.
If I followed the guide and the IR3, I would have paid twice.
I called the IRD and they confirmed it is an error by them.
A. There's no error. Either the IRD person you spoke to got it wrong, or you misunderstood. They were probably simply acknowledging that this has proved a problem area.
Your employers included both the premium and PAYE tax deductions in the figure on your summary of earnings, as they were meant to.
But when you're calculating your tax on your return, you should get credit only for the tax money.
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Money Matters: Shareout not for the shareholder
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