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138 posts

Master Geek


# 99644 23-Mar-2012 23:43
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Kia ora everyone,

My name is Chris Adam and I am a student at Computer Power Institute in Wellington. I am 5 months into a Diploma in Network Engineering Level 6.

On Tuesday the 20th of March, the staff handed out a sheet of paper containing some information from NZQA. It basically told us that PricewaterhouseCoopers had been appointed as the liquidators for our school and that negotiations were underway to resolve the issue. A copy of the letter as well as a statement from PwC can be found here. No further information was available from the staff (who were just as puzzled as us students), the NZQA, or PwC. The next day, there was a story (link here) in the Dominion Post which was able to shed a little bit more light on the circumstances. Basically, Computer Power (New Zealand) Limited owed the IRD $8,345,422 in tax, penalties and interest. The IRD had offered the company the chance to pay $3m to settle the debt. As a result of this, the students and staff are the ones who will be paying the penalty if nothing can be done to sort this out.

What makes learning at Computer Power so unique is the model that is used to educate us. First off, it is set up like a workplace. There are three shifts and students are able to choose the shift which suits them. There are no fixed semesters so we get public and statutory holidays as well as 100 hours of leave for which we need to apply through the staff. There is also a dress code policy. The lessons /modules are self paced and largely self taught with staff on hand to help with any queries. There are also facilitated workshops and projects. They (CPI) also give us field site training where we go out into the workplace and complete 100 hours with various IT companies.

To top it off, CPI have a full time Placement Consultant who works with the students to help them get into a paid position on completion of their studies. The courses that are offered are based around what is required by the industry and because they are broken down into small modules, they are easily adaptable to the ever changing IT job market. It is for these reasons that I, and many of the other 750 students (including 150 international students) choose to study at CPI instead of through traditional providers.

I have created a Facebook page where students, staff and everyone who thinks that this type of education provider should be saved can go and show their support. What I am asking of you is to go to the page here, and support us by liking the page and maybe leaving a comment. I would also appreciate any comments or feedback here on Geekzone.

I apologise for this post being so long but I want to make sure that everyone understands what is happening and is well informed.

Sincerely,

Chris Adam 

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1371 posts

Uber Geek


  # 599351 24-Mar-2012 01:28
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It would be a real shame to see something like this go, from the latest press release things are looking more hopeful though.

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Uber Geek

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  # 599520 24-Mar-2012 17:38
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Wow, another example of the IRD doing its bit to help out NZ students I see.

 
 
 
 


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Ultimate Geek

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  # 599526 24-Mar-2012 18:00
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Kyanar: Wow, another example of the IRD doing its bit to help out NZ students I see.


From the linked article

"Although the institute owed $8,345,422 in tax, penalties and interest, IRD had been prepared to settle for $3m, the court was told previously.Most of the tax debt was from unpaid PAYE and GST, but included KiwiSaver employee deductions of $166,040 and KiwiSaver employer contributions of $19,795."

I don't think IRD should be wearing any of the blame for this. 
 

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  # 599529 24-Mar-2012 18:16
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Kyanar: Wow, another example of the IRD doing its bit to help out NZ students I see.


More like the IRD doing it's bit to help NZ taxpayers. What do you suggest they should have done?

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Uber Geek


  # 599536 24-Mar-2012 18:29
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Kyanar: Wow, another example of the IRD doing its bit to help out NZ students I see.


I disagree. The fault is totally with the administration.  Tax planning is a critical part of any business, small to large.

Not paying PAYE is about as bad as you get.  GST/Kiwisaver is pretty bad too. No doubt they were collecting more GST than they were paying so no excuse there.  The students were faithfully paying the gst, so why was Computer power not forwarding the GST to the IRD?

For the IRD to cut the tax bill to 3 million was incredibly generous. 

It is sad for the affect students and staff though.

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Master Geek

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  # 599539 24-Mar-2012 18:39
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surfisup1000:Not paying PAYE is about as bad as you get.

Not paying PAYE usually results in criminal charges for the people responsible. Sentences range from community work to jail time depending on the amount of money involved.

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Uber Geek


  # 599561 24-Mar-2012 19:44
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I don't want to sound nasty but ..  to me on the surface it looks like both the general staff and students have been let down. 

If you look at the corporate office staff - the management part of it.  As an organisation they would have been getting at least monthly or 3 monthly financial reports advising them by their own inhouse accountants.  It's not very nice for the general staff there who suddenly gets served with a liquidation notice and likewise the students.  Unlike universities they donm't have semesters so a few of them might have found out after joining CPI after weeks or even days. 

Is it still running?  I read that staff may only have work for the few days and paid to the end of the month?  And if there is uncertainties if you will be paid, would some choose to ponder if they should turn up .....  You may not even get 4 weeks of redundancy payout so it's get another job asap and/or to Winz ...

One of the biggest issues or the issue re: most businesses failing is cashflow.  You can have all the fancy pancy things, all the growth, all the revenue but if you cannot settle your regular bills ............

 
 
 
 


gzt

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Uber Geek


  # 599567 24-Mar-2012 20:03
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"The tax debt began when the institute's shareholding company, Didasko Group (NZ), bought the School of Travel and Tourism in September 2006.

Mr Horton said the Qualifications Authority had asked him to help the school which was on the brink of collapse with 500 students whose fees were not protected"

http://www.stuff.co.nz/dominion-post/business/6609428/Computer-training-school-broke

More detail in the article. CPI is a perfectly viable business, someone will buy it lock and stock from the receiver.

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Uber Geek


  # 599572 24-Mar-2012 20:14
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I did read once that in AU before they may had traded under a different name - they had finance issues as well ......

gzt

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Uber Geek


  # 599581 24-Mar-2012 20:46
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rayonline: I did read once that in AU before they may had traded under a different name - they had finance issues as well ......

In New Zealand as "Interim Technology Training" and  "Spherion" as well.

269 posts

Ultimate Geek


  # 599669 25-Mar-2012 08:24
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Computer Power are in talks with another provider to take them over. Its going to be OK. However not paying tax just means they couldn't run their business in a fiscally responsible manner, and its not the IRD's fault. its theirs.

There are also other providers looking to jump in to get the student and the all important EFTS.



138 posts

Master Geek


  # 599714 25-Mar-2012 12:25
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Thank you to everyone who has posted here. As netspanner has mentioned, the liquidators are in negotiations with a potential purchaser. You can read the latest release from them here:
http://www.pwc.co.nz/media-centre/press-releases/update-computer-power-nz-limited-in-liquidation-march-2012/

Although the release is optimistic of a favourable resolution, it is is very carefully worded. I truly hope that we are able to continue studying in the same fashion without too much further disruption.

Thanks again,

Chris Adam 

2644 posts

Uber Geek


  # 600932 27-Mar-2012 19:37
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Kyanar: Wow, another example of the IRD doing its bit to help out NZ students I see.


Pinning it on the IRD seems a tad unfair. There is a clear legal requirement to pay PAYE which the IRD (rightly) enforces. They were collecting the GST off the students that they are required to pass on, and weren't, and the IRD rightly takes a tough line on this as well. In this case they were unable to pay, even when the IRD apparently offered to slash $5.7 million off what was owed and settle for $3 million.

Tax planning is something that even sole traders take care to do properly, and I doubt a large business of this type wouldn't have known about the legal requirements and had qualified accountants to advise it. Usually when you see this type of news it's symptomatic of massive problems with the underlying business - and diverting money that should be set aside to make tax payments is a last act of desperation from a business with a failing business model, major cash flow issues and no lines of credit etc left. While IRD may have brought things to a head, I doubt they were the root cause of the issue. They would likely have tried for a resolution (as per the apparent attempts to settle), and if the difficulty was temporary but the business was sound they would have been able to do so.



128 posts

Master Geek


  # 600951 27-Mar-2012 20:08
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From what I'm led to believe, CPI was asked,as gzt said above, by the government to bail out their sister school. I am told there was a misunderstanding regarding the payment of tax owed by the sister school. Due to this they are unable to meet their tax obligations and have gone into liquidation.

An oversight perhaps but this isn't shaping up too be a case of avoidance or evasion. It looks to me like an honest misunderstanding.

Also, IRD are in no way to blame for this. They didn't shaft CPI, they didn't do this out of spite or because they were evil. They offered an option to pay a reduced amount and settle the entire matter.

gzt

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Uber Geek


  # 600957 27-Mar-2012 20:19
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I was quoting from the linked stuff.co.nz article.

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