More than 11 years after starting of the Trinity tax avoidance case, the Supreme Court of New Zealand dismissed appeals that investors brought. The court upheld penalties which included repaying the tax, plus pay interest on that money and full amount of shortfall penalties.
Both the High Court and Court of Appeal had previously ruled the scheme was tax avoidance, which involved potential tax losses of about $3.7 billion, according to information provided by Inland Revenue.
Investors in Trinity bought a 50-year licence to grow Douglas fir trees on land, owned by the Trinity Foundation companies, and agreed to pay a fee of $2 mln a hectare in 2047, after the trees were harvested. However, investors depreciated the licence fee, and deducted the cost of an insurance policy with a British Virgin Islands-based company.
It was found by justices that, although the claimed deductions complied with the ordinary specific provisions in income tax legislation under which they were claimed, the Trinity scheme involved tax avoidance arrangements. By this reason, on the basis that the deductions were part of a wider tax avoidance arrangement, justices disallowed the claims.