Dr Cullen is dead wrong on the issue of tax on compensation for lessees, ACT Rural Affairs Spokesman Owen Jennings said today.

“The 1997 Maori Reserves Land Amendment Act is absolutely clear – no income tax is payable on any compensation. Section 31 of the Amendment Act alters the Income Tax Act of 1994 to achieve this purpose.

“Letters of offer to lessees sent out on Te Puni Kokiri letterhead states very clearly that no tax is payable on the compensation offer being made to that farming family. (A copy is attached)

“Dr Cullen is also dead wrong on the question of what the compensation is actually for. The state is rightly acknowledging a loss of value in the lessees’ joint interest in the land. The change to the lease arrangement diminishes lessees’ value in their properties by hundreds of thousands of dollars. That is a capital loss like other capital losses including losses under the Public Work Act and Treaty of Waitangi – no tax is payable.

“This Government has been caught out with a bigger bill for compensation that it budgeted for. It is prepared to throw the interests of a few hundred lessees and a matter of principle out the window to achieve a small reduction in its budget.

“ACT will fight alongside the lessees for justice and a recognition of property rights. ACT believes the public will see the gross unfairness of this sneaky move by the Government and be horrified," Owen Jennings said.

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