Ross test case driven by unfairness

Every Ross Asset Management investor who thinks they have unfairly overpaid tax should get in touch with their accountant to have their situation assessed, the tax adviser who took a test case for an investor says.

Thursday, August 13th 2015, 5:59AM

by Susan Edmunds

Brent Gilchrist has called for the IRD to refund tax paid by victims of David Ross on fictitious profits.

Defrauded investors were at first told by the IRD they could have their tax returns from 2008 onwards reassessed in light of the stolen money.

Last March they were told that had been stretched to eight years prior because investors had made a “clear mistake or simple oversight” in filing their tax returns.

But the department argued that some of the investment returns were still legitimate and should be taxed as such.

Gilchrist last year filed a test case claiming an additional refund for an investor who lost $875,000.

IRD disagreed but the case went to the Disputes Review Unit, which recently found in his favour.

The test case was only worth less than $5000 to the investor concerned but Gilchrist said it could have wider ramifications.

He said he was driven by the unfairness of the situation.

“It’s a clear case, the investor was being taxed on income they never got. Under New Zealand law, if someone steals money from you the thief is then taxed on any gains. The IRD was arguing that some legitimate investments were made by Ross but I felt that didn’t gel with the courts’ view of what Ross did, which was fraud from the outset. If that’s the case, there is no legitimate investment.”

He said in some cases, the refunds due could stretch to hundreds of thousands of dollars.

It would depend on the amount of fictitious profits Ross had been reporting to the investors, he said. “$5 million has been thrown around as the possible level of refund."

He said it looked unlikely so far that the IRD would take a proactive stance and follow up with investors. Each person would likely need to apply to the department individually.

Some accounts have been recalculated to less than 4% of their initial reported value.

Ross is serving 10 years and 10 months in jail for defrauding investors of $115 million.

Tags: Ross Asset Management