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APN News & Media is heading to the High Court over a $48 million tax claim after failing to convince the Inland Revenue Department that its deductions for interest claimed on certain financing transactions was correct.
The publisher of the NZ Herald newspaper had hoped to resolve the dispute via the IRD's adjudication unit, whose work is aimed at resolving claims at an early stage to reduce the number of litigated cases.
But the unit advised the company on Friday that it agrees with IRD's position, meaning the tax department will shortly issue APN with notices of assessment denying the deductions.
"In response to this step the company will commence litigation in the High Court to defend its position in relation to this matter," APN says in a statement. "The company is satisfied that its treatment of the financing transactions is consistent with all relevant legislation and that no tax will become payable."
IRD is seeking the $48 million for the period up to December 31 and penalties amounting to 50 percent of the tax in dispute, as well as interest. That pushes the total above $72 million, though APN says it has tax losses it can use as an offset amounting to $32 million.
Extra tax is the last thing APN needs right now, having posted a full-year net loss of $A455.8 million last week on increased write-downs on the value of goodwill and its newspaper mastheads.
The company's managing director and most of its board resigned this month after major shareholders opposed plans to raise new capital.
The shares last traded at 27.5 Australian cents on the ASX and have shed two-thirds of their value in the past 12 months.