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

 


Toll anticipates $19M for tax avoidance penalties

Toll anticipates $19M for tax avoidance penalties

By Pattrick Smellie

Jan 15 (BusinessDesk) - Toll Holdings has revealed a possible cost of $19 million from its battle with the Inland Revenue Department over the use of optional convertible notes to shuffle trans-Tasman income.

But the company has yet to include provisioning in its accounts for the possible loss of its tax dispute as a key Court of Appeal decision is still pending on the issue, which could see as many as 16 Australian companies with New Zealand subsidiaries hit with additional tax bills of up to $300 million in total.

Toll Group (NZ) declared a $35.9 million loss for the year to June 30 due to major changes in finance income and expenses between the last two financial years, in accounts lodged with the Companies Office.

In the 2010/11 year, Toll NZ declared finance income of $52.1 million, compared with just $1.4 million last year, while finance expenses rose from $28.3 million in the previous year to $42.8 million in the year under review.

Operating earnings before finance expenses and tax were roughly level with the previous year, at $7 million, against $7.3 million in the year earlier, with total revenue lifting to $383 million from $377.1 million the previous year.

Toll is one of 16 companies with trans-Tasman operations who are facing challenges by the IRD about the use of OCN's, a quasi-equity instrument, to reduce tax liability on this side of the Tasman between 2003 and 2011.

IRD won the first test case, involving West Australian firm Alesco, in late 2012. Alesco challenged in the Court of Appeal last October and a judgment has yet to be issued.

"The group ... makes provision in its financial statements only where it is probable that actual events giving rise to a liability will occur and the amount of the liability can be reliably estimated," the notes to the Toll accounts say.

Other Australasian operators caught up in the challenges include Telstra and the owners of the TV3 and Radio Live broadcasting networks, Ironbridge Capital.
The Toll accounts note there are two sets of disputes, one relating to OCN transactions between 2003 and 2008, which the Alesco case related to, and the other relating to transactions between 2009 and 2011 which have yet to make it to the High Court.

"The financial impact of the dispute, including interest and after the effect of available tax losses, is estimated at $19 million," the Toll notes say. In Toll's case, the IRD has handed down amended tax assessments relating to investments made by Toll between 2002 and 2005.

Toll bought what is now the state-owned KiwiRail from American investors who had acquired the national rail service in a privatisation deal in the mid-1990's. Toll resold the rail part of the business back to the New Zealand government in 2008, while retaining the TranzLink trucking and freight logistics operations.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news