Insurer AMP Life has won a $27 million tax case in the High Court at Wellington.
Justice Robert McGechan found that Inland Revenue officers should have allowed losses totalling more than $27 million as a tax deduction after AMP lost money in the 1987 sharemarket crash.
In his ruling, released this week,
the judge said that AMP's financial services arm made serious losses in 1988, 1989 and 1990, worth about $82.6 million.
The company, through a series of transactions, sought to sell its shares in one of its subsidiaries, AMP Financial Services, and claim the losses as a tax deduction.
The case centred around whether the particular losses could be claimed as a tax deduction twice.
The tax department's lawyers claimed there could not be a double deduction, but AMP lawyers said there was no legal precedent for that stance.
The losses had already been claimed as deductions by individual companies that were part of the AMP group, and the case was to consider whether AMP could also claim the losses.
Justice McGechan said the nub of the IRD's case was that it was absurd for AMP to claim two deductions for the one economic loss.
But the law did not turn on whether something was an economic absurdity, but on whether the arrangements involved qualified for a deduction or not.
He ordered Inland Revenue to allow the deduction.
IRD may lodge an appeal.
- NZPA
