She denied telling Mr Paramanathan: "F*** off to India. You come here and get all of the Kiwi jobs, eat your f*** curry and f*** off to India. This is a Kiwi job."
However, Ms McNee did admit she was "frustrated and agitated at the driver", who she said would not respond to concerns about the fare.
Southern District police commander Superintendent Andrew Coster said police officers must maintain the highest standards of behaviour in both their on- and off-duty conduct.
"We work for an organisation that prides itself on maintaining high levels of professionalism and strong community relationships."
"Everyday our police staff are striving to do their best for their communities and we will continue to build partnerships with groups more vulnerable to crime and safety issues, particularly minority groups," Mr Coster said.
He said police acknowledged the courage of Mr Paramanathan in bringing the matter to their attention.
"We hope that the professional manner in which this case has been managed has gone some way to restoring his trust and confidence in police."
Mr Coster said all employment matters relating to Ms McNee were now at an end.
Police spokeswoman Vivien Pullar was unable to confirm whether any disciplinary action against Ms McNee had taken place following last year's incident.
She said she was also unable to comment on whether Ms McNee's resignation was the result of any such action.
Executive director of the New Zealand Taxi Federation Roger Heale said justice had run its course.
"We all want to move forward providing the best service possible to the public whilst maintaining our excellent relationship with the police."
