IRD targets those on Rich List

The 100 wealthiest New Zealanders are being targeted in a controversial Inland Revenue operation matching their tax returns to details in public records such as the Rich List.

"It's turned out to be a bad idea to be on the National Business Review Rich List," PricewaterhouseCoopers tax partner John Shewan said yesterday.

He said some of those affected felt they were victims of the "tall poppy syndrome" for being successful.

But IRD corporates national manager Spyros Papageorgiou said the response from the targeted taxpayers had been positive, with none refusing to supply requested information.

The department has created a special unit in Hamilton to audit the 100 top "high-wealth" New Zealanders, who it believes control more than 3500 companies, trusts and other entities between them.

It is looking at individuals and families with wealth of more than $50 million, or more than $20 million where such people have substantial property investments, complex business structures or pay little tax compared with their assets.

So far the unit has sent questionnaires to 69 of them, seeking information on their assets, income and entities including trusts. To date 57 have responded.

IRD matches the responses against information from its files and outside sources including media reports, the Companies Office, the Immigration Service, Customs, finance institutions and overseas tax authorities.

The operation is modelled on a highly successful one run by the Australian Taxation Office, from where Inland Revenue Commission David Butler was hired in 2001.

Mr Butler told Parliament's finance and expenditure committee that 13 full investigations were under way as a result of information gained so far from the returned questionnaires.

The Australian audit had unearthed many one-off "boutique" arrangements designed to reduce tax liabilities for wealthy individuals, and there were early signs of similar arrangements here, he said.

But Mr Shewan said IRD would not find as much unpaid tax as the Australian audit had, because New Zealand's wealthy people were more honest about their tax affairs.

IRD spokeswoman Miranda James said the department could not be too specific because it had to maintain the secrecy of individuals, but many of the targets of the operation are probably some of the wealthiest people on the Rich List.

Many rich New Zealanders have moved overseas, beyond the reach of IRD. They include beer baron Douglas Myers ($650 million), merchant bankers Sir Michael Fay and David Richwhite ($630 million each) and entrepreneur Alan Gibbs ($300 million)

- NZPA