Parade of professors for tax hearing

By IRENE CHAPPLE

It's a veritable parade of professors.

Expert witnesses are flying in from around the globe for the court case over New Zealand's largest alleged tax dodge scheme.

The Trinity case is now in the third week of a legal marathon in the High Court at Auckland and the hearing is expected to stretch for two more months.

The line-up of heavy hitters for the plaintiff taxpayers includes Professor David Teece, a New Zealand economist based at the University of California, Berkeley, Professor Michael Clutter, an expert in forest finance from the University of Georgia, and American logging expert Bob Flynn.

For the defendant, the Inland Revenue Department, insurance experts John Arpel, a principal of Zurich-based Allianz Risk Transfer, and Professor Neil Doherty, from the University of Pennsylvania, have already given evidence.

The two were trundled up early in the piece after being unable to change their international schedules to fit in with the two-week delay on the hearing's start time.

For the plaintiffs, local witnesses including forestry industry experts Mark Belton and Dennis Neilson have already been in the box singing a similar tune.

They said douglas fir was a highly valued product and forestry was a hot investment when this scheme was set up.

Bruce Stewart, QC, representing the taxpayers, is arguing the Trinity scheme - based around a douglas fir venture in Southland - was a truly commercial beast.

The scheme's promoters, whose names are under wraps pending an appeal of a suppression order, set up a structure that gave investors immediate tax benefits and also contributed to charities.

Investors would not pay the bulk of the investment cost - $2 million per hectare for a licence premium - for 50 years.

According to a previous court judgment, 200-odd investors were able to claim tax benefits of up to $70 million a year before tax legislation was changed for the 2004-05 year.

That, alleges Inland Revenue, is a tax avoidance scheme.

It has also alleged the insurance scheme guaranteeing the venture's income was a sham.

This week the plantiffs' witnesses continue, starting with Donal Curtain, an adviser to Parliament's finance and expenditure select committee, who will give evidence on reasonable expectations on valuation over the scheme's 50 years.

Others through the week will give evidence around valuations for douglas fir and tell the court the Trinity forest venture was well maintained.

The case is before Justice Geoffrey Venning.