By Deborah Hill Cone
Friday 3rd September 2004 |
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It wants to reveal the names of well-known businessmen who bought into the controversial scheme, which Inland Revenue is challenging in the High Court.
The lawyer who fought robustly for TVNZ's right to report details of the winebox transactions and won - Simpson Grierson's William Akel - is back on the case.
But in tax terms Trinity is far bigger than the winebox involving a potential hole in the tax take of $3.7 billion over the life of the venture, compared with just $147 million for the wine-box deals and $226 million for the Actonz software scheme.
Investors bought a 50-year licence to grow douglas fir trees on land owned by Anglican church-linked charity Trinity Foundation, with an agreement to pay a licence fee of $2 million a hectare, due in 2047 when the trees are harvested.
Some also took out an insurance policy with British Virgin Island-based company CSI to cover any shortfall.
The advantage was that they could depreciate the licence fee even though the expenditure had not been made yet but the IRD disallowed the deductions, arguing the scheme was not a bona fide investment but was set up to avoid tax.
Many of the taxpayers have settled with the IRD and some of the better known names are found in that group rather than among the handful of test cases now before the court.
The only party that has been publicly named as an investor that has settled is a CanWest entity, linked to broadcaster TV3. CanWest's name came out because the company admitted to the National Business Review it had bought into the scheme.
But among the 200-odd investors are other companies linked to business figures who have a high profile in professional circles, although they are not household names.
TVNZ head of news and current affairs Bill Ralston said the broadcaster was considering its legal options over the story. "There are a couple of routes we could take we're looking at various arguments and various strategies."
Under consideration is an application to challenge the suppression orders protecting the identities of taxpayers involved in the scheme, including those who have settled.
TVNZ would have to come up with some compelling new arguments, as Justice Geoff Venning, who is hearing the case, has already considered an application by the IRD to lift name suppression of the parties to the case and turned it down.
He maintained the suppression relating to those who had settled but proposed making public the names of the two figures who set up the scheme. "There is a legitimate public interest in tax cases, particularly where the arrangements in issue and challenged by the commissioner [of Inland Revenue] are novel. There is also legitimate interest in the parties involved in them, either as the creators of the arrangement ... or as investors."
That ruling is being appealed and the parties' names remain under wraps until the issue is resolved.
The nine cases before the court are drawn from the first tranche of investors in the scheme and include companies linked to the scheme's designers.
Meanwhile, investors continue to settle their cases with the IRD. Tax sources said the current deal was to pay outstanding tax plus a 10% shortfall penalty (rather than the 100% investors could be charged) as well as interest at 12% a year.
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