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

 

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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