Some of New Zealand's wealthiest investors are being asked to cough up $246 million over the Trinity forestry scheme deemed by the High Court to be a tax dodge - and that's just the start.
That sum, says Inland Revenue Department director of litigation Karen Whitiskie, is for the first
three financial years of the scheme - 1997, 1998 and 1999 - and does not include 100 per cent penalties imposed on investors from 1998.
Over the scheme's lifetime, more than 300 taxpayers invested.
Penalties quickly send tax bills soaring and most Trinity investors have yet to settle with the IRD.
One, Auckland accountant Bruce Sheppard, said the IRD's new figures indicated his previous estimate that $500 million could be at stake over the scheme "might be a bit light".
Trinity drew in some of New Zealand's wealthiest investors.
On Monday in the High Court, Justice Geoffrey Venning ruled the dominant purpose of the scheme - which involved a douglas fir forest in Southland - was tax avoidance.
Whitiskie would not nominate the total amount of money at stake. She said later years had yet to be assessed - and Trinity was still operating.
About 10 per cent of investors had reached confidential settlements and more had indicated they would settle but had yet to do so.
Those who had settled accounted for a minority of the initial $246 million.
More than 140 cases, where Trinity investors were challenging IRD assessments in the Taxation Review Authority and the High Court, would remained stayed until after the test case had been appealed.
Immediately after Justice Venning's judgment, the plaintiffs in the test case - including Trinity scheme architect Garry Muir - said they would go to the Court of Appeal.
Whitiskie said it was impossible while litigation continued to know how long the disputes would drag on.
Ten plaintiffs - including Muir's law firm partner, Clive Bradbury, and Westpac head of asset management Greg Peebles - took part in the test case.
In their case, the Trinity investment structure had included:
* Trinity Foundation (No 3), a charitable company that owned land in Southland to be used for growing a douglas fir forest.
* CSI, an insurance company in the British Virgin Islands.
* Southern Lakes Forestry Joint Venture, a syndicate of investors that acquired a licence from the Trinity Foundation company in connection with land owned by that company.
The IRD had refused to allow the plaintiffs' tax deductions for licence and insurance premiums in the 1997 and 1998 financial years and had also imposed a penalty for the 1998 year.
According to the IRD, investors could have claimed up to $3.7 billion in tax benefits over the intended 50-year life of the Trinity scheme.
Paying up
The IRD wants an initial $246 million from investors in "tax-dodge" Trinity scheme.
Most of the 300 investors have yet to settle.
The IRD will not predict how long the dispute will last.
Some of New Zealand's wealthiest investors are being asked to cough up $246 million over the Trinity forestry scheme deemed by the High Court to be a tax dodge - and that's just the start.
That sum, says Inland Revenue Department director of litigation Karen Whitiskie, is for the first
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