NZ's super-rich and the tax man: 350 people. Each worth $50m plus. And a fight over $85.8m

Hundreds of New Zealand taxpayers are worth over $50 million. Photo / Getty Images

The number of super-rich earners on the New Zealand taxman's radar has skyrocketed in the past five years with 350 people now worth more than $50 million — some of whom are in a fight over more than $85 million in disputed tax.

The group - labelled High Wealth Individuals (HWI) by Inland Revenue - has soared 75 per cent since 2013, while the country's poorest residents continue to struggle.

The numbers have been described by commentators as extraordinary.

In the 2018 tax year, Inland Revenue was attempting to claw back $85.8m in disputed tax from some of those individuals and their associates, companies, partnerships, trusts and related individuals.

That figure could fund Prime Minister Jacinda Ardern's $470,000 salary for the next 180 years.

Disputed tax is the difference between what a tax customer thinks they need to pay and what Inland Revenue thinks they actually owe. Inland Revenue said an investigation into HWIs often sparked a tax dispute and, if the matter wasn't resolved in one tax year, it rolled into the next.

Each HWI has, or controls, wealth in excess of $50 million. Their sources of income often include property development and investment.

Associated entities of the 350 super-rich individuals totalled 11,585.

Six years ago, in 2013, there were only 7009 HWIs and associated entities. In the 2014 tax year the disputed cost was $112.8m.

Tax consultant Terry Baucher said the plummet in disputed monies and rise of HWIs could be determined by how much tax they were paying.

"If [the number they pay is] rising steadily over the period with those numbers you'd say they are becoming more compliant," he said.

"If not, then that would point to something else going on. Then the question is, does Inland Revenue still have the skills and expertise to tackle this group?"

Inland Revenue could not reveal how much tax HWIs and their associated entities were paying each tax year due to confidentiality rules.

However, it did confirm the amount our richest taxpayers were assessed as owing between 2014 and 2017:

• $604,407,000 in 2014,
• $762,133,000 in 2015,
• $756,475,000 in 2016,
• $770,797,000 in 2017.

Information isn't collected on whether HWIs are citizens, Inland Revenue said, but anyone who derives income in New Zealand is required to pay tax here.

Max Rashbrooke, author of Wealth and New Zealand, said the number of super-rich New Zealand taxpayers was "pretty striking".

"You'd expect some increase [of HWIs] over time with inflation but a 75 per cent increase over five years, that is massively above inflation," he said.

"You're seeing a real acceleration at the top end, whereas at the poorer end of New Zealand as best we can tell, the overall picture is either of growing debt or of stagnation."

Max Rashbrooke said the numbers were "striking". Photo / Supplied

Political commentator Bryce Edwards said the trend of increasing wealth was clear and the numbers were "extraordinary".

He said the numbers appeared to be buoyant despite the global financial crisis which caused a blip in high-level wealth numbers.

"It suggests under the current Labour-led Government the wealthy continue to do quite well and they haven't experienced any kind of great wealth loss," he said.

"Despite complaints about business confidence or a supposed reduction in confidence in the economy, clearly, those at the top end are doing incredibly well.

"It's going to be difficult trying to rectify that situation at the moment. We've got a Government that doesn't seem to have any kind of agenda to increase taxation on the wealthy."

Finance Minister Grant Robertson declined to comment on the increase of HWIs and their entities, but said he expected all Kiwis to pay their "fair share".

"The Government is aware of the inequalities that exist in New Zealand and is working to improve outcomes for all New Zealanders, particularly those in the most need."

Robertson said the Labour Party was still formulating its tax policy for the 2020 election but he outlined some initiatives the Government had already introduced.

• Increasing the minimum wage to $17.70 an hour which will rise to $20 an hour in April 2021.
• Indexing main benefits to wage growth, increasing the amount that beneficiaries can earn before their benefit reduces and introducing the winter energy payment.
• Helping parents with education and health costs, including cheaper doctors' visits, expanding school-based health services, removing NCEA fees and the need for decile 1-7 schools to ask for donations.

Finance Minister Grant Robertson. Photo / Mark Mitchell

An Oxfam report released in January found New Zealand's two billionaires, Graeme Hart and Richard Chandler, increased their collective wealth by $1.1 billion in 2017-18.

Hart is estimated to be worth $9b; and was ranked by Forbes in March as the 158th richest person in the world.

Meanwhile, the poorest 50 per cent of the population saw their collective wealth fall by $1.3b during the same period, Oxfam said.

To help resolve wealth inequality in New Zealand, Rashbrooke suggested implementing a wealth tax, which he acknowledged would ruffle feathers.

"There is, at times, a suggestion that if you raise taxes on the wealthy then they'll all just decamp to Australia.

"In reality, tax is only one factor among many and I'd think if you did have a wealth tax you'd get a lot of grumbling but there would be very few people leaving the country."

Hitting people whose net wealth was over $1m with a wealth tax could potentially boost tax revenue by $6b a year, he said.