UC Researcher on Russell’s Impact on NZ Tax Law

UC Researcher Graduates After Looking Into Russell’s Impact On New Zealand Tax Law

April 12, 2013

A University of Canterbury (UC) accounting and information systems researcher will graduate next week after successfully completing a Master of Laws thesis studying John George Russell, who reputedly has the largest personal tax bill of anyone in New Zealand - in excess of $200 million.

UC researcher Alistair Hodson has spent several years studying Mr Russell’s tax wrangles with Inland Revenue, including related litigation that ultimately found its conclusion in the Privy Council in London.

The former Securitibank head has been fighting Inland Revenue's attempt to enforce the tax bill, which initially started as a $15 million tax assessment but now includes years’ worth of penalties and interest.

``Russell is well known in the New Zealand tax community as the creator and defender of the ‘Russell tax template’, developed in the 1980s and described as a mechanism to turn the ‘water’ of taxable receipts into the ‘wine’ of untaxed gains,’’ Hodson says.

``He became a leading figure in the development of the then emerging New Zealand money market, and the managing director of the merchant bank Securitibank. After the Securitibank collapse in 1976 Russell started practice as a tax advisor and business consultant, operating from a suburban Pakuranga home for many years with up to 59 staff working shifts between 4am to 11pm.

``Russell is Inland Revenue’s most litigious taxpayer with template related issues being litigated for over three decades with well over 80 cases covering both substantive and procedural issues.

``He has had limited success on procedural matters, claiming his wins have been the result of good luck more than anything else. Although there has been limited litigation success for him, one fact remains true: he has had an impact on the way Inland Revenue conduct themselves with taxpayers that challenge their actions.

``What is unique to the Russell template cases is not only the longevity of the litigation but also the different tracks Inland Revenue have followed to assess income derived from various parties associated with the Russell template.

``Russell has also had an impact on both the Companies Act 1993 and the Receiverships Act 1993. I have been privileged as part of my research to see Russell present his case personally in the Court of Appeal. Mr Russell has also alleged judicial bias and sought the judicial disqualification of a judge.

``My thesis has examined aspects of Russell’s contribution to New Zealand tax jurisprudence and also to gain an understanding of the man behind the litigation. He does not appear to be motivated by money and is actively involved in church life, playing the church organ on a regular basis.

``The research not only traces some of the legal journey that Mr Russell has endured, but also seeks to capture and understand what drives a person to continue for so many years in litigation. At the age of 78 he is still engaged in a significant litigation workload.

``Russell has left an indelible mark on the Inland Revenue litigation landscape and it would be doubtful if a single individual in the future would surpass his efforts,’’ Hodson says.

His thesis was supervised by Associate Professor Andrew Maples and Professor Adrian Sawyer.

ENDS

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