Published 13 August 2012
The Supreme Court has refused John Russell leave to appeal against the Court of Appeal’s rejection of his objection to a tax assessment, which on judgment in 2010 had reached $139 million.
Mr Russell, 77, has been battling authority, and Inland Revenue in particular, ever since the 1976 collapse of the Securitibank finance group he headed. Court findings that his template was set up for tax avoidance date back to 2001.
Inland Revenue assessed Mr Russell’s tax liability on the basis that he’d entered a tax avoidance arrangement. Both the Taxation Review Authority and the High Court reached the same conclusion, followed by the Court of Appeal, and the Supreme Court said Mr Russell hadn’t shown Inland Revenue’s reconstruction was wrong, let alone by how much.
Mr Russell lost a major round in his long-running battle with Inland Revenue in 2010, with a High Court judgment against him for $139 million of back taxes, interest & penalties for the period 1985-2000. Mr Russell claimed his earnings were below $300,000, but Inland Revenue claimed that without tax-avoidance arrangements the figure should have been $15.75 million. Mr Russell remains director of a long list of companies, including Commercial Management Ltd & Downsview Nominees Ltd.
The Court of Appeal gave Mr Russell leave in April to advance a point he’d expressly not taken in the High Court, the effect of section 99(4) of the Income Tax Act, although arguments over section 99 have been part of the battle for a good 10 years.
The Court of Appeal upheld the 2010 High Court judgment and added that the overall scheme was the means by which profits were laundered without income tax being paid. The Court of Appeal concluded that the income was to be attributed to Mr Russell because he was the governing mind of the template arrangements, which were designed to shelter the income earned.
An Inland Revenue summary of the Court of Appeal’s April decision says that court concluded that the income was to be attributed to Mr Russell because he was the governing mind of the template arrangements, which were designed to shelter the income earned.
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Attribution: Court judgment, Inland Revenue case notes, story written by Bob Dey for the Bob Dey Property Report.