Metropolis 'was my retirement scheme'

Andrew Krukziener. Photo / Greg Bowker

The Metropolis apartment building in downtown Auckland was supposed to be property developer Andrew Krukziener's final act, a project that would have allowed him to retire when sold, a court heard yesterday.

Instead, 45-year-old Krukziener is the subject of a $6.2 million application by the Inland Revenue to bankrupt him.

Krukziener has offered a creditors' proposal of $350,000 to repay $47 million of debt to creditors to avert bankruptcy.

The hearing continues on Monday to determine whether the proposal will be accepted.

Krukziener admits the Metropolis project failed financially, taking down more than $25 million, and creating lasting effects for the trusts and companies associated with it.

Yesterday, IRD lawyer Nick Malarao asked Krukziener how it was possible that between 1991 and 2002 he only paid $27,000 in tax when he was at the helm of several multi-million-dollar property developments.

Krukziener answered that he did not pay himself a salary, and therefore paid no PAYE, receiving instead loaned money from family trusts which he repaid years later.

"I was effectively borrowing capital and I repaid capital," he said.

This scheme is the centre of another legal battle between Krukziener and the IRD.

The IRD has already won two cases against Krukziener, the first being a Taxation Review Authority decision that deemed the loans were used as income and therefore should be taxed.

Krukziener appealed this and lost again in the High Court at Auckland.

He is now taking his case to the Court of Appeal.

IRD has a judgment against Krukziener for $575,000 from the Taxation Review Authority decision.

Krukziener said yesterday, while giving evidence, that if he could change the way he paid himself during that period, he would.

IRD lawyer Nick Malarao asked Krukziener why he was so concerned about paying back loans to banks and lenders but wasn't concerned about paying his tax to the commissioner.

Krukziener said he had always, until the Taxation Review Authority decision, paid his tax obligations.

He said when he and his accountant sat down in the 1990s to work out a payment plan that would keep cash available for developments but allow him money to live on, he never dreamed about tax evasion.

"If I could do it again, I would have paid myself a salary."

If Krukziener is bankrupted, he won't be allowed to trade through a company or be a director.

He will be allowed to earn up to $40,000 as an employee before the Official Assignee steps in.