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

 

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

f work for Pumpkin Patch staff

Retail: Pumpkin Patch Brand, IP Sold To Catch Group

The receivers of failed children's clothing retailer Pumpkin Patch have confirmed that the company's brand and intellectual property have been sold to Australian online retailer Catch Group. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news