Bankruptcy case waits on appeal judge

The Inland Revenue's application to bankrupt former rich lister Andrew Krukziener is likely to be delayed until his appeal in the department's other case against him is decided.

In November, the Taxation Review Authority successfully argued that loans of $5 million paid to the property developer between 1991 and 2002 from his trusts should be assessed as income. The judgment against him for $575,000 noted he did not receive a salary then and paid very little tax.

According to the judgment, Krukziener said the majority of the loans had been repaid and fringe benefit tax had been paid on the interest-free loans. He claims the loans were capital and not salary.

Krukziener submitted that his group entities rolled over profit from one development to the next, so that eventually there would have been significant tax paid but this did not happen because the Metropolis tower in central Auckland failed.

During the appeal in the High Court at Auckland this week, his lawyer, Mike Lennard, said loans could not be assessed as income, "period". Justice Patricia Courtney reserved her decision.

IRD lawyer Nick Malarao said the bankruptcy application was "most likely" to be delayed until Justice Courtney gave her judgment.