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$1m NRC tax refund to help early pay off of events centre

Date: 24 August, 2012


$1m NRC tax refund to help early pay off of events centre

A $1 million Northland Regional Council tax refund will eventually go back into ratepayer’s pockets – and cut the period over which rates are levied for the Northland Events Centre by more than a year.

After a lengthy debate at their monthly meeting in Whangarei recently, (subs: Tues 21 August) regional councillors eventually agreed six votes to two

that the $1,018,623.12 refund would go towards paying back the $13M internal loan the council used to help pay for the events centre.

Ultimately, that decision will slash the amount ratepayers have to pay towards the centre by around $1.6 million (including about $600,000 in interest) and also cut the amount of time it takes to repay the loan by about 15 months.

The tax refund was issued recently after an IRD decision that a $3 million council contribution towards the centre in 2008/09 (part of its overall $13M stake in the centre) was a donation and could be offset against tax on dividends NRC received from NorthPort that same year.

Regional council Chairman Craig Brown says the council had applied to the IRD for a ‘binding ruling’, which gives an interpretation on how tax law applies to the situation.

“At the time we made the contribution, we opted for a conservative approach – to pay the tax so that if we weren’t successful our ratepayers wouldn’t end up forking out for penalties and late payment fees.

“Securing this $1 million refund is a great result for Northland ratepayers, and I’d like to extend my thanks to council staff, Enterprise Northland (now Northland Inc , the Whangarei District Council and our tax adviser Mike Brunner, all of whom who helped us to reach this positive outcome.”

Mr Brown says this week’s decision means the council can now effectively pay off the loan for the events centre more than a year earlier than originally hoped in about September 2018, instead of December, 2019.

The regional council contributed a total of $13 million towards the $18.5 million events centre, which is being paid for via an annual targeted rate of $28.75 for Whangarei district ratepayers and $5.75 for those in the Far North and Kaipara districts.

Mr Brown says the council investigated several options for using the $1 million, including reinvesting it in income-producing assets or transferring it to the council’s Investment and Growth Reserve to support economic development in the region.

“However, as the refund came from our contribution to the events centre, to my way of thinking it makes sense that it should go towards paying that facility off sooner – and that’s a bonus that’ll benefit every Northland ratepayer.”

Voting for the recommendation to pay off the centre loan early were Mr Brown, his deputy John Bain and Councillors Bill Rossiter, Tony Davies-Colley, Ian Walker and Bronwyn Hunt. Against were Councillors Joe Carr and Graeme Ramsey.

ENDS


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