According to reports in the national media, New Zealand's Finance Minister Michael Cullen is planning to close off a loophole that would allow an Australian-owned publishing group to lease services from New Zealand newspaper and publishing firm INL in order to cut its tax bill.
John Fairfax Holdings is planning to buy INL's publishing assets in order to sell the titles on and lease them back via a third party, which will reduce the amount of tax it has to pay to the government. INL, jointly owned by media magnate Rupert Murdoch, agreed to sell around 80 magazine and newspaper titles to the Australian publisher for $1.2 billion in April 2003.
Dr Cullen has acknowledged that the arrangement is perfectly legal under New Zealand law and in talks with Fairfax, admitted that the company appeared ready to discuss its plans for INL. However, the Finance Minister has also stated the move represents a "significant threat" to the country's tax base, leading many to believe that the New Zealand government will attempt to prevent such leasing arrangements in future by amending the relevant taxation law.
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