Trinity payments were for 'land use'

By PAUL PANCKHURST


Bruce Stewart, QC, yesterday fronted up in the High Court with part one of closing submissions for investors fighting the Inland Revene Department in the Trinity tax case.

The Trinity scheme involved contentious insurance and licence arrangements connected with a venture to grow a Douglas fir forest in Southland.

It is New Zealand's biggest alleged tax dodge case, with investors blocked from claiming up to $3.7 billion in benefits over 50 years.

Part one of Stewart's submission said the investors were entitled to deductions connected with a $2 million-per-hectare licence premium to be paid in 2048.

He said the payment was for "the right to use land" and therefore fell within the relevant definition of "depreciable property".

He rejected the IRD's claim that the premium was for the right to share in "stumpage" - timber in standing trees - and not deductible.

Stewart is expected to deliver the final two parts of his closing submission today.

Part two deals with the insurance aspects of the dispute.

Part three argues Trinity was not a tax avoidance arrangement.

The investors are the plaintiffs and the IRD is the defendant in the test case.

Setting the scene for his submission, Stewart told Justice Geoffrey Venning the investors entered into the Trinity investment in early 1997.

In November 1998, the IRD started an investigation.

In September 2000 and March 2003, the IRD issued Notices of Proposed Adjustment (NOPAs).

These "contained sweeping allegations, many of which were exaggerated or factually incorrect".