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

 

Burgers To America: BurgerFuel Opens In The USA

BurgerFuel Worldwide are excited to announce the opening of their first USA based restaurant in Indianapolis, hot off the back of the Indy 500. More>>

English On Budget: Businesses Over-Egg Corporate Tax Cuts

Cutting New Zealand's 28 percent corporate tax rate is "not a panacea in the way business groups sometimes market it," says Prime Minister Bill English. More>>

ALSO:

Auckland Port To Recapture Gas: Union Calls On Ports To Stop Spewing Methyl Bromide

The Maritime Union of New Zealand welcomes the decision by Ports of Auckland to stop releasing methyl bromide emissions into the air. The move to fully recapture the toxic gas after fumigation sets a new benchmark for industry best practice. More>>

ALSO:

Retail: Banks Shoes Calls In Receiver

Banks Group, which runs 14 stores across the country under the brands including Banks Shoes and Shoe Connection, has been tipped into receivership at the request of director John Bank. More>>

ALSO:

NZ's Space Programme: Rocket Lab Makes It To Space (But Not Orbit)

Electron lifted-off at 16:20 NZST from Rocket Lab Launch Complex 1 on the Mahia Peninsula in New Zealand. It was the first orbital-class rocket launched from from a private launch site in the world. More>>

ALSO:

Earlier: