the 07/23/2008

Did he breach the rules?

Did he breach the rules?

Since 2006 all MPs have had to declare assets and gifts. Beforethat, only Cabinet ministers needed to do so.

If Owen Glenn's donation to Winston Peters' legal bill isconsidered a "debt" or a "gift" it should have been declared.

Pecuniary Interests Register

What must be declared by MPs includes:

- A description of all debts of more than $500 owing by the MP thatwere paid (in whole or in part) by any other person and the namesof each of those persons.

- All gifts over $500 and, if known, the name of the donor.

The period for which information must be provided is the 12 monthsbefore January 31 of the year the return is submitted.

Cabinet Manual

- Ministers must declare all gifts over $500 and relinquish themunless they have the Prime Minister's okay.

Tax law

The lack of details about the payment makes it unclear where thereare tax obligations for either Mr Peters or Mr Glenn.

If gift duty on Mr Glenn's donation was due, it would amount to$25,000 - but experts say it would depend on a variety of factors,including Mr Glenn's Monaco home. Gift duty generally does notapply where the donor does not live in New Zealand or the money hascome from overseas.

Tax lawyer Tony Wilkinson from Buddle Findlay said he doubtedwhether Mr Glenn's donation could be treated as "income" for thepurpose of tax.

While there were few details about the payment, for it to be taxedas income it had to be "an income payment in nature", such assalary, wages or payment for work.

"Ordinarily gifts or donations don't meet that threshold," MrWilkinson said. "Here it would be unwise to assume simply becausethere seems to be a significant payment that it will have taxconsequences.

"Not all payments naturally have a tax liability attached to them."

Inland Revenue would not comment, but has previously said if oneperson pays another's liabilities with nothing expected in returnit generally meets the definition of a "gift", for which gift dutymust be paid on sums over $27,000 a year.