The Revenue Minister says the lobbying of his predecessor by the Prime Minister's lawyer about foreign trusts looked "perfectly normal".
Opposition parties want an urgent full-scale inquiry into New Zealand's foreign trust industry following revelations John Key's lawyer lobbied Todd McClay against reviewing the system.
In late December 2014, the Prime Minister's long-time lawyer and trust specialist Ken Whitney wrote to then-Revenue Minister Todd McClay saying he'd been assured by Mr Key there'd be no changes to the system.
It followed the IRD saying in mid-2013 it was concerned about the industry.
Mr McClay responded to the letter immediately to set up a meeting, and also wrote to the IRD saying he was concerned it would "close down" the industry.
Earlier this month, Mr Key's entry in the Register of Pecuniary Interest showed he'd made a short-term deposit into Antipodes Trust Group, of which Mr Whitney is an executive director.
There were at least two meetings in the following weeks between Antipodes, others in the industry, Mr McClay and his officials where the industry said the IRD was threatening their business.
At the time IRD had been working on tightening the rules on foreign trusts, and in a report to the minister said it had serious concerns.
By May 2015 the IRD's review had been canned, with Mr McClay telling the industry it wouldn't go ahead. The lead IRD advisor wrote to her staff saying the review was off because it wasn't a Government priority.
The documents were released by the Green Party using an Official Information Act request.
A spokesperson for Mr Key rubbished the claims, calling them "desperate".
Earlier this month, the Government appointed former PricewaterhouseCoopers boss John Shewan to look into the country's foreign trust disclosure rules in the fallout of the Panama Papers -- millions of documents showing the lengths people and companies go to, using foreign trusts, to avoid paying taxes.
Labour's finance spokesman Grant Robertson says the Government must now urgently widen its inquiry to "save New Zealand's reputation".
"Nothing less than an independent inquiry led by a person of the stature of a judge, with the ability to call witnesses and subpoena evidence, will restore confidence from taxpayers in the fairness of our system," he says.
"It is quite clear that John Key's links to this industry are strong, despite his previous denials. His dismissive attitude towards the concerns of the majority of New Zealanders about our 'tax haven' status shows how out of touch he is on this issue."
Mr Robertson says it seems the only way to get ahead in New Zealand is to be in the elite few who can get to a Government minister's ear.
Greens co-leader James Shaw says Mr Key must explain what assurances he did or didn't give to Mr Whitney about foreign trusts.
Current Revenue Minister Michael Woodhouse says he's seen the correspondence between the group and Mr McClay and says it "looked perfectly normal to me".
"It's not something that's out of the ordinary, they had a particular position they wanted to have clarified. There does appear to have been some confusion about whether Inland Revenue were interested in reviewing the whole foreign trust regime, or the disclosure requirements."
He said Mr Whitney had lobbied the Government on foreign trusts, but so do many others on a number of other issues.
He didn't think Mr Whitney being Mr Key's lawyer discounted him from having a view on government policy. He also said others in the group lobbying Mr McClay had also advised Labour on tax policy.
In a statement, a spokesperson for the Prime Minister said he has people talk to him all the time.
"It is common practice for him to refer them to the appropriate minister, where appropriate, or to answer if he is able to do so."
The entry in the Record of Pecuniary Interests came as perhaps a bit of bad timing, as it was made public the same week the Government had been questioned extensively over the Panama Papers controversy and its links to New Zealand.
Mr Key maintained it was nothing unusual, saying Mr Whitney had moved firms and took a deposit to cover fees across with him.
"I've covered my affairs the entire time I've been Prime Minister exactly the same way. My lawyer's changed firms; that's the end of the matter.
"It wasn't embarrassing seven years ago, it's not embarrassing today."