The Red Herring Known as Section 11 

Section 11 is the section of the AC Act 2001 that led the Corporation astray back in 2008-2009. The Corporation is desperate to seize upon this entirely unrelated section as its get out of jail free card. The problem for the Corporation is that just as the IRD has conflated PAYE Schedular Payments unlawfully with the wholly unrelated Schedular Income Category under the IT Act 2007,  the Corporation has conflated the permanent employee (salary and wage) clause 34 entitlement process with s 221's PAYE Income Payment levy process. The result of that is well documented. 

The Corporation wants to evade Schedule 4 clause 22 of the AC Act 2001 meaning of employee and instead unlawfully override it with the AC Act 2001 section 6 definition of employee. Both definitions go to the IT Act 2007 but to two entirely separate meanings in the IT Act 2007. 

 

The correct application of the AC Act 2001 Section 11

 

Section 6 of the AC Act 2001

 

The meaning of employee is the definition in paragraph (a) of the Income from Employment definition in the IT Act 2007 YA1.

 

Under that paragraph the following definition is provided:

IT Act 2007 YA1 Definition of Income from Employment 

income from employment—

(a)    means salary or wages or an extra pay:

It is clear that the meaning of employee under s 6 of the AC Act 2001 means a person who receives salary and wages. The question then is what has that got to do with self-employed earners?  

Evidently the Corporation has taken the view that because the meaning of employee under s6 means a salary and wage earner, the wholly separate self-employed earner PAYE levy process is somehow nullified under the PAYE levy regime provided by s 221 and Schedule 4 of the AC Act 2001. 

So to be clear, I am saying that s 221 applies in a specific way to PAYE Schedular Payments and the response is that I am incorrect because s6 states that an employee is a salary and wage earner. 


Again, how is it that a consideration, that is wholly confined to a completely different class of earner, somehow apply to this self-employed consideration? 

I note that RD 8 specifically states that schedular payments are not salary and wages. However this does not exclude schedular payments from being liable to pay income tax under the PAYE Income Tax regime. 

The fact that Schedular Payments are not salary and wages is reflected in s 11 of the AC Act 2001. S 11 is wholly reliant on the application of the meaning of the s 6 meaning of employee which is wholly confined to the definition of salary and wages. 

S 11 applies to the entitlement side of the process, that process being levies are paid to gain access to lawful entitlements. The meaning “earnings as an employee” is reflected verbatim in the following entitlement clause. 


Schedule 1 C 34

 

Weekly earnings if earner had earnings as an employee in permanent employment immediately before incapacity commenced: calculations

The Corporation is arguing that “earnings as an employee” is strictly interpreted. That is correct and it is clear that the strictly interpreted legislation in question applies to C 34 as above and C 34, like s 11 and the meaning of employee under s 6, is wholly concerned with permanent employees who are receiving PAYE Salary and Wages. 

On that basis the s 6 meaning of employee, earnings as an employee and s 11 have nothing to do with this situation under law in any way whatsoever. 

On that basis, every aspect of the argument provided by the Corporation that relies on the application of s 6 and s 11 have no substance in law at any level. 

Summary

It is my belief that the Corporation failed to have the updated levy / entitlement process for self-employed earners who receive PAYE Income Payments for the purposes of the PAYE rules implemented when it came into force on the 1st of April 2008. 

It seems evident that when these PAYE Income Payments started showing up in the system, ACC staff chose to address the issue by applying an unlawful interpretation that has overridden the will of the legislators. 

It is evident that the Corporation has been trying to present an argument through a misapplication of the entitlement system instead of applying the lawful levy consideration. 

 

 

When I raised the issue in 2018, the Corporation doubled down on its flawed reasoning but as the law clearly demonstrates, the Corporation is running an ultra vires process and is trying to support that unlawful position with ultra vires arguments that the Corporation has no right to advance in the first place let alone have those arguments accepted as a valid response to a massive failure to implement strictly interpreted law.