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Labour Party chiefs are dismissing claims by a former party electorate treasurer that an MP pressured her to declare fundraising money as a donation to avoid paying taxes.
Lisette Taylor, treasurer for Labour's Northcote electorate committee since 1998, has claimed MP Ann Hartley told her to treat money raised by a forthcoming Avondale Market raffle as a donation so tax would not have to be paid on it.
Mrs Hartley and committee chairman Hamish McCracken deny ever instructing Ms Taylor to do so.
But Ms Taylor said the demands were made at the committee's April meeting, where Mrs Hartley claimed it was all right because other electorates did it.
"I was effectively being asked to falsify tax records for tax avoidance purposes."
Ms Taylor refused and sent an email to other party members and several senior ministers claiming she was being asked to falsify records.
She was not re-elected treasurer at the committee's AGM a month later.
The stoush has prompted Labour to ensure all its electorates know of the tax laws around small fundraisers.
Party president Mike Williams conceded it was unaware the distinction was an issue around raffles and similar fundraisers until Ms Taylor raised it but denied any attempts at tax rorts.
He said a mix of members and non-members often participated in such fundraisers and it could be hard to distinguish them, so all electorates were told to err on the side of caution.
"We looked at this because we didn't think there was any difference. As far as raffles were concerned, we treated them all as fundraising for a charity, so as not taxable. When we became aware there was this subtlety in the law, we changed it [the practice]."
Mrs Hartley and Mr McCracken said Ms Taylor's claim that she was instructed to treat the proceeds as donations was wrong and personally motivated.
Mr McCracken said there was a general discussion at the April meeting about how such income should be treated because some on the committee had believed other electorates were treating raffle proceeds as non-taxable.
A clarification was sought from party general secretary Mike Smith, who said that tax must be paid on fundraising income unless it was from party members only.
He did not believe the committee had ever breached the rules, saying movie night sales and other fundraisers involving any non-members had always been treated as taxable.
In response to Ms Taylor's claims that he had said he would not work with her, he said he had raised concerns about whether the committee could continue to have a constructive relationship with Ms Taylor on it at the AGM after an extended period of conflict.
Yesterday, Ms Taylor was standing her ground. She believed the practice of declaring all fundraising income as "donations" was more widespread than one electorate. She said other treasurers had contacted her in the past, claiming pressure from MPs and election candidates to treat funds from things like door sales for fundraising auctions as donations.
"I can't be sure that any tax avoidance has taken place but the question has been raised so frequently around the place in the last three years or so that it is clear to me there could well have been or there has been intent."
Taxing times
* The IRD says income from members of non-profit organisations is not taxable. But income from outside the "circle of membership" is taxable.
* Labour has been accused by a former official of labelling raffle proceeds "donations" to get around tax laws. The party says it has tidied up its practices.