NZ Super caught up in tax leak

"The use of collective investment funds domiciled in locations such as the Bermuda and the Cayman Islands is legal, common and widely considered best-practice portfolio management." Guardians of NZ Super Fund

Details of the past business dealings of the New Zealand Superannuation Fund in Bermuda may be among documents leaked in the ‘‘Paradise Papers’’.

The board of the Guardians of New Zealand Superannuation, which manages the NZ Super Fund, said in a statement that Bermuda-based law firm Appleby had provided it with local advice relating to reinsurance contracts.

Appleby was also likely to have advised various parties with which the Guardians had dealt, the board said.

But it indicated it did not believe that should be a source of any embarrassment.

‘‘The use of collective investment funds domiciled in locations such as the Bermuda and the Cayman Islands is legal, common and widely considered best-practice portfolio management,’’ it said.

‘‘The collective investment fund provides a tax-neutral jurisdiction to ensure its collective income does not pay a second layer of foreign tax in relation to income on which all applicable taxes have already been paid at source.’’

New Zealand income tax was also paid on income from the collective investment vehicles by NZ Super, which ‘‘fully complies with its tax obligations both internationally and in New Zealand’’, it added.

Appleby is the law firm at the centre of the Paradise Papers, in the same way Mossack Fonseca was at the heart of the Panama Papers. Both financial leaks have shone light on the mechanisms that businesses and wealthy individuals have used to manage their wealth in countries that are regarded as tax havens.

The Guardians’ board said Appleby had so far been unable to confirm whether or not any NZ Super documents had been leaked.

But based on information from the Inland Revenue Department, it understood that one of its whollyowned subsidiaries, NZSF Private Equity Investments (No. 1) Ltd, was mentioned as a partner of another firm, Coller International Partners V (CIP V).

Appleby was advising Coller in respect of a transaction, not the Guardians, it said.

While is not clear the Paradise Papers will expose any wrongdoings by businesses or individuals, it has again pushed the tax affairs of technology giant Apple and others into the limelight.

Reports based on the Paradise Papers showed that the iPhone maker shifted key parts of its business to Jersey in a move to maintain a low tax rate.

Apple responded that changes made to its corporate structure in 2015 were designed to ‘‘preserve tax payments to the United States’’, and not to reduce the taxes it paid anywhere else.

Inland Revenue said on Monday that it was was interested in hearing from any New Zealand taxpayers with exposure to Appleby.

Strategy manager John Nash said the tax department would examine any intelligence it received about New Zealand taxpayers and check whether it aligned with their previous tax return positions and disclosures.