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'Trinity' tax case companies ordered to pay 15-year-old $2.5M bill

Friday 20th September 2013

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Companies associated with the Trinity forestry scheme have been ordered to pay $2.43 million in 15-year-old back-taxes and penalties, or face potential liquidation.

The Ben Nevis and Bristol foresty centures failed in their attempt to strike out demands by the Inland Revenue Department relating to unpaid tax from 1998 and subsequent penalties. The Sept. 12 judgment of Associate Judge John Faire in the Auckland High Court, was published on the Justice Ministry's website this week.

The judge ordered Bristol pay $819,000 and Ben Nevis pay $1.61 million within 10 working days of the Sept 12 ruling, otherwise the tax department could apply to liquidate the companies. The debts arose from tax deductions claimed by the companies in the 1997 and 1998 tax years, which were then attributed to their shareholders.

The tax department reassessed the shareholders and imposed tax and penalties on them in relation to the 1998 tax year, leading to a series of landmark decisions that have gone on to see tax avoidance redefined by the New Zealand courts over the last decade.

Associate Judge Faire rejected a claim that there was still a dispute as to whether the debt was due, saying that would undermine earlier judgments on the case.

Last year, the Supreme Court turned down claim the tax department fraudulently won its tax case in the Trinity scheme in a last ditch bid to set aside the landmark 2004 ruling, which has been the benchmark for IRD's successful run of tax avoidance cases. The tax department claimed the Trinity scheme would have cost taxpayers up to $3.7 billion over the 50-year lifespan of the investment.

The judge declined to order the appointment of liquidators, saying there was no prior warning an application to wind the companies up would be made and that doing so wouldn't bring any finality to the proceedings.

BusinessDesk.co.nz



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