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A change in tax approach to feasibility expenditure
A change in tax approach to feasibility expenditure
The Court of Appeal has
overturned a High Court decision which would have allowed
Trustpower Limited to deduct expenditure incurred in
assessing the feasibility of capital projects before any
commitment was made to seek resource consents.
If the case is correct, it suggests that expenditure incurred in assessing the feasibility of a possible capital project or capital investment is not deductible.
The Appeal Court's approach departs from how many taxpayers have treated this type of expenditure to date, and from Inland Revenue's policy as reflected in Interpretation Statement 08/02: Deductibility of feasibility expenditure.
As yet, it is unclear whether Trustpower will appeal.
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