IRD team to sift through papers on foreign-owned trusts

The IRD has set up a team to sift through documents about foreign-owned trusts from the Panama Papers. Photo / Janna Dixon

The IRD has set up a team to sift through documents about foreign-owned trusts from the Panama Papers.

A cache of material from the leak of documents from the Panamanian law firm Mossack Fonseca is due to be released. Prime Minister John Key said the information could lead to law changes.

"It is quite useful that the Panama Papers get released," Mr Key said, "if that helps assist the New Zealand Government in making improvements to any of the laws that we have, or the partners that we work with like the OECD."

He said he did not condone the hacking of private information, but now that information would be released "there might be some benefits to gain from that".

Any New Zealanders found to be avoiding tax could expect a "knock at the door", he said, and if there was evidence of trusts being used improperly by foreigners the rules could be tightened.

Labour leader Andrew Little said the Prime Minister's tone had changed.

"There may well be now a rapidly changing position, which is because they discovered that, actually, most New Zealanders don't like this, and don't like us to be party to this."

Talk of the IRD investigating Kiwis was something of a distraction, he said, when the real issue was the use of the trusts by foreigners to avoid tax.

Labour wants the foreign trust industry shut down, but Mr Key called that a "knee-jerk" reaction.

Following the first release of details from the papers last month, the Government began a review of the disclosure rules for NZ's foreign trusts. Opposition parties have criticised the review's narrow focus.

An article in the Australian Financial Review on Friday shed new light on the number of foreign investors who had moved their cash and assets into tax-free New Zealand-based trusts, and the way these investors were able to minimise their tax.

It also said Auckland-based lawyer Ken Whitney, whose clients include Mr Key, had written a reference for Auckland law firm Cone Marshall to get accreditation with Mossack Fonseca in 2009.

After the release of the papers, Mr Key said Mr Whitney had assured him he had not had any dealings with Mossack Fonseca.

Yesterday the Prime Minister said the reference did not contradict that: "People give references all of the time."