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

 

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

New Paper: Ninety-Day Trial Period Has No Impact On Firms' Hiring

The introduction of a 90-day trial period has had no impact on hiring by New Zealand companies although they are now in widespread use, according to researchers at Motu Economic and Public Policy Research. More>>

ALSO:

Corrections: Serco Exits Equity Stake, Remains As Operator

Serco has sold its equity stake in the company that holds the contract to design, build and run Wiri Prison in South Auckland but continues as sub-contractor to operate the facility. More>>

GDP: NZ Economy Grows Faster-Than-Forecast 0.7%

New Zealand's economy grew at a faster pace than expected in the first quarter of 2016 as construction expanded at the quickest rate in two years. The kiwi dollar jumped after the data was released. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news