One group in the IRD's sights is those who transfer their superannuation funds across from the UK.  Inland Revenue says these transfers are taxable and many people haven't been paying taxes on them.

This is not pleasant news for these people, who could face potentially large tax bills.  It is also a problem for their advisers, who had operated under the assumption the transfers weren't taxable and had advised on that basis.  With the IRD inviting submissions on its proposal it is likely there will be some strong feedback from the industry.

While it's impossible to say exactly how much money this will involve, the amount Sovereign has been whacked for is fairly clear: $47.5 million.  This follows a High Court judgment that found in favour of the IRD's view that Sovereign hadn't paid enough tax on reinsurance arrangements between 2000 and 2006.

This is not the first time Sovereign's parent ASB has come out on the wrong side of a legal dispute with the IRD, as it along with the other big Australian-owned banks were hit several years ago with a combined $2.2 tax bill after court judgments finding they hadn't paid enough tax on structured credit transactions. 

Another IRD dispute, albeit on a much smaller scale, involved prominent Auckland financial planner Grant Cleary, who has settled with the tax department.  This isn't the first wind-up attempt he has had to fight off, with the Registrar of Companies previously trying to liquidate some of his companies.

Cleary's comments about the IRD's attitude are similar to what many other small business owners have to say.  This story is a reminder to those who own their own advisory businesses that while the FMA is the regulator they need to think about the most, they also need to avoid falling foul of the tax department as it can be a costly and time-consuming exercise.

Another costly and time-consuming exercise, at least relative to the potential rewards, is giving advice on investing in the SOE floats.  As often happens when political goals collide, the government is sending contradictory messages by on the one hand regulating financial advice but on the other hand making it easy for people with no investment experience to buy shares.

This has the potential to go wrong if for whatever reason Mighty River Power and the other SOEs don't perform well after being listed.  Thousands of first-time investors could be put off the share market, although nothing could match the lasting damage done by the 1987 crash.  And at least these days there's KiwiSaver, which is a sort of back-door way of getting New Zealanders into the share market even if they don't know it.

Also this week, Plan B Wealth Management is on the verge of getting a new owner.  IOOF is looking to buy Plan B's Australian parent company, which is listed on the ASX.

An interesting point is IOOF mentioning that it is looking at opportunities in the New Zealand retirement savings market, which for the most part means KiwiSaver.  The advent of KiwiSaver hasn't been lucrative for financial advisers so far but having more people with larger retirement savings can only do good things for the value of financial planning businesses in the long run.

In mortgage news, the OCR has been kept on hold, with no new guidance as to when it might be lifted.

And in the insurance section, Russell Hutchinson asks the question: why, when people are living longer, do they also seem to be sicker than ever before?  This is a big issue for the insurance industry including advisers, who have fewer 'clean' cases to work with.

In deposit news, this week, Torchlight has fully repaid a $28 million loan that is being investigated by the Financial Markets Authority. GFNZ (formerly Geneva Finance) has announced a rights issue, while Dorchester wants to redeem its capital notes early.  And finally, Blue Star is up for sale despite its bonds likely being worthless.