Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Qantas ring-fences $10.3M for potential penalty in IRD case

Qantas ring-fences $10.3M to cover potential penalty in NZ tax dispute

By Paul McBeth

Jan. 8 (BusinessDesk) - Qantas Airways, Australia's dominant airline, has ring-fenced $10.3 million of tax losses to cover any penalties in its disputed tax case with the Inland Revenue Department over interest deductions claimed on convertible notes.

The airline's New Zealand subsidiary Jetconnect, which manages the group's trans-Tasman passenger schedule, elected to use "tax losses within the Qantas Group against the shortfall penalties assessment" imposed by the IRD, according to financial statements lodged with the Companies Office. New Zealand's tax department is seeking to deny interest deductions claimed on the notes which were used to fund Qantas's former interest in rival carrier Air New Zealand.

"In the event the optional convertible notes dispute is found in favour of the company, the losses utilised against the above mentioned shortfall penalties will be reinstated to the group," the company said.

The IRD contends the hybrid securities, which let companies juggle equity and debt to provide a tax advantage, were structured purely to minimise tax. The tax department has previously won a High Court ruling in favour of its assessment of the notes against Western Australia's Alesco Corp, and is waiting on a Court of Appeal decision after a hearing last year.

Qantas's decision to use the tax assets to cover the penalties comes in a year when the Australian airline posted its first annual trading loss since being privatised in 1995.

The New Zealand subsidiary reported a 6.2 percent fall in profit to $10.6 million in the 12 months ended June 30, on a 3.3 percent decline in revenue to $75.1 million, the financial statements show. The local unit paid an $88 million dividend to its Australian parent in the 2011 year, though no return was made in the latest period.

Sister New Zealand unit, Jetstar Airways, which employs and hires cabin and technical crew for budget brand Jetstar Airways Pty Ltd, made a profit of $1.9 million in the June year, from $1.4 million a year earlier, according to separate financial statements. Operating income, which is derived from the wider Jetstar unit, climbed 31 percent to $21.3 million. Spending on manpower and staff increased to $18.7 million from $14.4 million.

Jetstar was the stand-out performer for Qantas in 2012, delivering record underlying earnings of A$203 million on sales of A$3.08 billion.

Shares in Qantas gained 1.6 percent to A$1.575 on the ASX yesterday, and have rallied 41 percent in the past six months. The stock is rated an average 'outperform' based on 13 analyst recommendations compiled by Reuters, with a median target price of A$1.50.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Trade Agreements: TPP Minus US Starting To Gain Ground

The Japanese government is picking up the pace on reviving the Trans-Pacific Partnership trade and investment deal, with talks scheduled next month among the 11 countries left in the pact after the withdrawal by the US after the election of president Donald Trump. More>>

ALSO:

PACER:

Prices Up 2.2%: Annual Inflation Highest In Over Five Years

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation," prices senior manager Jason Attewell said. "Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year". More>>

ALSO:

Undertaxed? NZ Income Tax Rate Second Lowest Among Developed Nations

New Zealand workers pay the second smallest portion of their income to the government among developed nations and less than half the average ratio of their Organisation for Economic Cooperation and Development peers. More>>

ALSO:

Cyclone Cook: Round Up Of This Week’s Weather

One of the significant impacts this week was flooding due to excessive rainfall amounts. Rainfall amounts topped out at 350mm over the past 60 hours in parts of northwest Nelson, with 200mm+ measurements recorded about Coromandel Peninsula, and between 150-200mm in the Kaimai Ranges. Rainfall amounts of between 30-50mm were commonplace elsewhere. More>>

ALSO:

Earlier: Batten Down The Hatches For Cyclone Cook

Although fast-moving, Cyclone Cook will be destructive and MetService Expert Meteorologists have issued Severe Wind Warnings for the whole of the North Island apart from Northland... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news