TAX NEWS - June 2010

New Zealand Tax: Property developer fights tax avoidance case

Auckland property developer Andrew Krukziener - the man behind the city's 42-storey Metropolis apartment tower – fronted up in the High Court today to fight a claim by the IRD that he avoided tax.

Inland Revenue already has judgment against Krukziener from the Taxation Review Authority. But his lawyer, Mike Lennard, told the court the department had erred in its belief that money Krukziener received from a trust for 12 years was assessable income and, therefore, taxable.

Lennard told Justice Patricia Courtney the situation arose from debts relating to Metropolis which owed about $20m.

Krukziener had been forced to realise capital assets and some of the funds were used to repay loans. It was not tax avoidance, Lennard said.

"Losses were accumulating and this kept the wolves at bay for some time."

One of the asset sales was a building in Dominion Rd, which was sold for $12.8m. A "cash surplus" of $4.6m went to Krukziener to pay his current account debts.

"Metropolis failed. [Krukziener] was under considerable pressure," Lennard said.

The case is continuing.