Close eye kept on World Cup scalpers

Photo / Brett Phibbs

The taxman is monitoring Trade Me as part of a strategy to make sure ticket scalpers and sellers of pirated jerseys pay tax on any illegal Rugby World Cup-related revenue.

But at the other end of the scale, the New Zealand Rugby Union says there is little or no chance it will benefit from long-standing Rugby World Cup tax breaks which have been flagged as potential liabilities in Budget documents.

The Inland Revenue Department yesterday confirmed ticket scalpers and sellers of unauthorised merchandise related to the World Cup will be liable for tax on their ill-gotten gains.

An IRD spokesman said the department's approach to enforcing the tax obligations on scalpers was "as for anything else we do for the hidden economy".

"We've got ways of keeping an eye on ways people are generating money and we do expect them to pay tax on it."

Monitoring Trade Me was "one of the obvious ones" but the spokesman refused to confirm whether IRD would monitor areas near the entrances of Rugby World Cup venues.

"For obvious reasons we keep our methods under wraps ... we have ways of keeping an eye on scalpers and we would expect them to comply with tax obligations."

Meanwhile, the Government and the NZRU have confirmed RWC-related tax breaks which were put in place by the previous Labour Government are unlikely to be called on.

Under the breaks, the Crown agreed to reimburse any income tax incurred by Rugby New Zealand 2011 Ltd, a joint venture between the Government and the NZ Rugby Union.

The Crown has also agreed to reimburse the NZ Rugby Union for any withholding tax "that might be incurred on certain payments made in relation to the tournament".

On the first of those two arrangements, a spokesman for Revenue Minister Peter Dunne said Rugby NZ 2011 Ltd was expected to make a loss, "therefore it will not have any tax liability, and therefore no reimbursement from the Crown ..."

Rugby NZ 2011 Ltd is tasked with making sure 1.2 million tickets are sold, venues are up to scratch, 20 teams get all the support they need, 2000 members of the media from around the world are looked after and the International Rugby Board and its sponsors have their commercial needs met.

It expects to lose $39.3 million and the Government has agreed to underwrite two-thirds of that loss. It will be wound up after the cup and cannot carry forward a tax loss.

NZRU Head of Finance Brendon Bentley said the union was unlikely to benefit from the second tax break either. Under a "Host Union Agreement" with the IRB the union was required to pay a tournament fee of £48 million ($97.6 million) and other costs of £7.6 million.

"This fee is not subject to withholding tax. It will be subject to GST which the NZRU will pay and recover as per any other business expense for which we have a valid GST invoice."