Taxing time for country's fattest cats

Some of the country's wealthiest people have had to cough up a total of nearly $36 million in additional taxes after being investigated by the Inland Revenue Department.

Last year the IRD set up the High Wealth Individual unit to look at the tax-styles of the rich and inventive.

The unit has initially investigated 100 people who control wealth of at least $20 million. Most of them are New Zealand residents, but some are non-residents with interests here.

IRD spokesman Spyros Papageorgiou said that on top of the $36 million already paid, another $102 million had been assessed and was under dispute, and $100 million had been identified as potential "tax risks".

People under investigation were identified Big Brother-style, by comparing information from places such as the Companies Office, land searches, asset registers, overseas tax authorities and even media reports such as the National Business Review's Rich List.

Mr Papageorgiou said the people being targeted tended to have highly complex financial structures, with money channelled into myriad associated trusts, companies and other entities. One person under scrutiny had set up 155 associated entities.

The use of trusts to divert taxable income was just one popular tax dodge. Other avoidances included: luxury assets being shown as business assets, arrangements that have been entered into to generate tax losses, transferring profits to associated offshore companies and entering into schemes deliberately designed to avoid tax.

Working out tax jurisdiction for cross-border entities was another issue the IRD had to work through.

The IRD said because of the complexity of the financial structures involved, cases still under investigation could take several years to finalise.

- NZPA