Tax plan plaintiffs quit fight with IRD

By PAUL PANCKHURST

Some of the wealthy individuals in New Zealand's biggest tax avoidance case are bowing out of their battle with the Inland Revenue Department.

But their names remain a secret.

The "Trinity scheme" case is largely obscured from public view because High Court suppression orders prevent the publication of evidence or the taxpayers' names.

A previous High Court judgment said Trinity involved about 200 investors claiming tax advantages of $70 million a year from 1998.

It said investors could have claimed up to $3.7 billion over the 50-year life of the scheme except that legislation would block off most deductions from the 2004/2005 tax year.

The latest case started on Monday in Auckland with the Inland Revenue Commissioner as the defendant and three groups of unnamed plaintiffs.

But people familiar with the dispute said some individuals were this week negotiating settlements and would drop out.

The Trinity dispute is notable for the sums involved, and the high profiles of some of the scheme's participants.

The news media await Justice Geoffrey Venning's decision on an application from the Inland Revenue Department for suppression and confidentiality orders in the case to be lifted.

That is expected this week.

The previous court case describes the Trinity scheme as a joint venture connected with the growing of one rotation of douglas fir trees on 4840ha of land.

It lays out arguments from the IRD that tax deductions claimed by investors were not legitimate under the Income Tax Act 1994 or, alternatively, that Trinity was a tax avoidance scheme.

The judgment said investors formed joint ventures which took licences for areas of land for growing trees.

As an example, a licence agreement connected with the first set of investors provided for the payment on December 31, 2048, of a premium of $2,050,518 a hectare.

For tax purposes, investors amortised the cost of the premium over the 50 years before payment was due.

The earlier judgment showed another part of the dispute was over tax deductions claimed by investors for insurance premiums connected with the scheme.

The first group of investors claimed deductions for premiums not due to be fully paid for 50 years.