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

 

Tourism: China Southern Airlines To Fly To Christchurch

China Southern Airlines, in partnership with Christchurch Airport and the South Island tourism industry, has announced today it will begin flying directly between Guangzhou, Mainland China and the South Island. More>>

ALSO:

Dodgy: Truck Shops Come Under Scrutiny

Mobile traders, or truck shops, target poorer communities, particularly in Auckland, with non-compliant contracts, steep prices and often lower-quality goods than can be bought at ordinary shops, a Commerce Commission investigation has found. More>>

ALSO:

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Bullish On China Shock: Slumping Equities, Commodities May Continue, But Not A GFC

The biggest selloff in stock markets in at least four years, slumping commodity prices and a surge in Wall Street's fear gauge don't mean the world economy is heading for another global financial crisis, fund managers say. More>>

ALSO:

Real Estate: Investors Driving Up Auckland Housing Risk - RBNZ

The growing presence of investors in Auckland's property market is increasing the risks, and is likely to both amplify the housing cycle and worsen the potential damage from a downturn both to the financial system and the broader economy, said Reserve Bank deputy governor Grant Spencer. More>>

ALSO:

Annual Record: Overseas Visitors Hit 3 Million Milestone

Visitor arrivals to New Zealand surpassed 3 million for the first time in the July 2015 year, Statistics New Zealand said today. The record-breaking 3,002,982 visitors this year was 7 percent higher than the July 2014 year. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news