Trio of Trinity tax dodge companies put in liquidation

Three investor companies in the Trinity tax scheme have been put into liquidation by the High Court this month on the back of about $6 million of claims from Inland Revenue.

The Trinity scheme in 2004 was ruled to be a tax avoidance arrangement - a decision upheld by the Supreme Court four years later.

The IRD at the time claimed the scheme would have cost taxpayers up to $3.7 billion over its 50-year lifespan.

The scheme was a forestry investment allowing each participant to license land from the Trinity Foundation for 50 years to plant a crop of Douglas fir. The fee was $2 million, or about $40,000 per year.

Although the $2 million was not to be paid until 2048, it was immediately tax deductible to the investors. So the investors effectively claimed a deduction of $40,000 each year.

The result was a 50-year tax holiday for investors - most of whom would have been in their 90s or older by the time they were due to pay the tax.

Between 200-300 taxpayers were involved, although most settled with the IRD before the 2004 judgment.

A handful fought on and three of them - Redcliffe Forestry Venture, Lexington Resources and Accent Management - were put into liquidation last Friday by the High Court.

Vivian Fatupaito of KPMG is the liquidator of the three firms and said the total amount claimed by the IRD prior to her appointment was close to $6 million.

Redcliffe was directed by Trinity's architect Garry Muir, who is facing separate bankruptcy action from the Bank of New Zealand over a guarantee he gave on a debt.

Muir has applied to halt the bankruptcy bid but a decision on the matter has yet to be released.

Two other Trinity investor companies, Ben Nevis Forestry Ventures and Bristol Forestry Venture, were put into liquidation in October after applications from IRD.

According to liquidation reports, unsecured creditors were claiming $3.8 million from Ben Nevis and $1.5 million from Bristol.