Senior MP becomes own landlord to claim maximum allowance

Lindsay Tisch yesterday. Photo / Mark Mitchell

A senior National MP has been using a front company to maximise the amount of taxpayer-provided cash he can claim from the accommodation allowance paid to members whose home is outside Wellington.

Lindsay Tisch's arrangement meant the $410 a week he has been claiming from the public purse for his Wellington accommodation was paid to his own property investment company.

This made him landlord and tenant - with the taxpayer picking up the bill.

By using the company, Mr Tisch has been able to claim close to the maximum $24,000 a year in expenses that MPs from outside Wellington are entitled to for accommodation.

The allowance was set up to cover the "reimbursement of actual and reasonable expenses" but Mr Tisch has been able to use it to pay for his own property, which has made a capital gain.

He has also listed director's fees from the company as a payment received for four years running in the MPs' register of pecuniary interests but last night said he had checked with his accountant and they had not been paid.

The fees had been listed in the register as a "precaution" in case they were ever paid.

Other MPs are using similar arrangements to Mr Tisch, but Parliament's Speaker Lockwood Smith last night denied it was a loophole and said he was happy for the practice to continue as long as the rent they claimed was based on an independent market valuation.

Mr Tisch, who is Deputy Speaker, bought the apartment on the Terrace for $260,000 in 2003.

He moved into a flat on the Parliamentary precinct this month but until then the rent was paid by the department handling MPs' expenses, Parliamentary Services.

Mr Tisch and his wife are directors of the company and he is the sole shareholder. The apartment is its only investment and the rent its only income, but Mr Tisch said it was not turning a profit because there was still some mortgage on it.

The apartment has made a capital gain of $20,000, the most recent valuation rating it as worth $280,000.

Mr Tisch said the rent was set independently at the market rate and he was not doing anything wrong by funnelling the money through his own company.

"It doesn't matter whether it's going in there [his company] or going to my paying to Joe Bloggs down the road," he said.

As Deputy Speaker Mr Tisch is paid a base salary of $169,900 a year as well as getting a $14,800 expense allowance, travel perks and a superannuation contribution.

The $410 a week in rent he is claiming amounts to another $21,334 a year.

MPs from out of Wellington can claim up to $24,000 a year allowance for rent, board or hotel costs.

If they own a property in their own name, they can use the allowance to service interest on a mortgage but not to pay off the principal - so if the mortgage is paid off or low, they no longer receive payments.

A Parliamentary Services spokesman said this was because paying off the principal was not deemed an "actual and reasonable" expense under the Speaker's Directions.

However, MPs can set up a front company, or put the property in a trust or superannuation fund and claim full market rent.

Dr Smith said a change in the rules he introduced this year to require that MPs with an interest in a property got an independent valuation of the rent "protects taxpayers".

He said it was "not an unacceptable practice" to channel the money through a company or trust.

Mr Tisch lists the company - Heritage 653 Limited - on the MPs' register as a "property investment company". He now has the apartment rented out privately.