Iwi’s profit stirs tax bill criticism

Waikato-Tainui has recorded its highest ever profit and rebuffed criticism of a small tax bill.

The iwi body, a significant landholder with a thriving corporate business, is one of the wealthiest registered charities in New Zealand.

Announcing a $137.8 million profit for the 2017 financial year, Waikato-Tainui has come under fire from right-wing groups for paying $12,000 income tax in 2016.

In its annual result released on Sunday, the tribe announced equity in its $1.2 billion assets had increased from $128m to $1.06b.

Tainui Group Holdings (TGH), the tribe’s commercial arm, had a record-breaking profit of $114.8m and paid a total dividend of $22m to the tribe.

TGH also sold portions of assets to pay debt, opting to enter joint ventures.

It sold a 50 per cent share of The Base to Kiwi Property for $192.5m in May 2016. The tribe also sold a 20 per cent share of the Tainui Novotel Auckland Airport to Auckland International Airport.

The 2017 annual result counted no income tax, as losses sustained are expected to strike out any income tax due.

Waikato-Tainui and TGH are registered charities as income from its businesses should be used to benefit its 70,000-odd members.

Tribal authority Te Whakakitenga o Waikato chairman Maxine Moana-Tuwhangai said the results were a major step forward ‘‘for the success and wellness of our people today, our mokopuna of tomorrow, and our whenua and awa’’.

She said the charitable status was recognition of historical injustices including the Land Wars in the 1800s and subsequent confiscation of 480,000 hectares of land.

In 2017 the tribe spent $57.5m on various initiatives, including $5m on language revitalisation, $12.5m on affordable housing and $40m on rural land holdings.

TGH dividends would be invested in the tribe’s education, housing, employment and other initiatives.

The annual distribution of funds was far in excess of the amount it would pay for tax, Moana-Tuwhangai said.

‘‘Ultimately, the aim of our organisation is to improve outcomes for our people where there is a disparity between WaikatoTainui and non-Maori on a range of social factors, provided it is a charitable activity,’’ she said.

Charitable companies are commonly criticised for receiving tax exemption on profits that are reinvested instead of spent on the designated charitable cause.

Another often cited example is the Seventh Day Adventists Church-owned Sanitarium foods.

The New Zealand Taxpayers’ Union said the ‘‘selfcongratulations’’ were soured by the small tax bill and antiseparatist group Hobson’s Pledge said the tribe should be more ‘‘guarded in gloating’’.

University of Auckland commercial law professor Julie Cassidy, an indigenous rights and tax expert, said there was nothing wrong with reinvestment as the ultimate goal was benevolent.

‘‘IRD has been really aggressive about this … there is no way these entities would continue to have this charitable status unless they were applying the money.’’