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Vector wins tax case over Auckland CBD tunnel payment

Vector wins tax case over Auckland CBD tunnel payment

By Paul McBeth

Aug. 29 (BusinessDesk) - Vector, the Auckland electricity and gas network operator, has won a tax case against the Inland Revenue Department over a $53 million payment relating to access rights to its Auckland CBD tunnel.

In the High Court in Auckland, Justice John Faire declared payments made by national grid operator Transpower in relation to the underground tunnel, known as NSTC, didn't constitute income and cancelled the tax department's assessment, according to a judgment published today.

The judge rejected the IRD's claim that 'other revenues' were intended to capture capital payments of this nature, and that "if Parliament intends to tax capital it must do so with clear language," the judgment said.

"The payments were of a once and for all nature producing advantages to Transpower which were enduring," the judgment said. "This factor clearly points toward the expenditure being capital in nature."

That means the section of the Income Tax Act 2007 the IRD was relying on didn't apply, a finding which "is enough to dispose of the case."

The judge reserved an order on costs to let the parties discuss the matter.

In a separate statement, Vector said the ruling meant the tax department will be required to refund $7.6 million of tax already paid, subject to any appeal process.

Shares of Vector rose 1.5 percent to $2.68, and have gained 2.7 percent this year.


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