Vector [NZX: VCT], 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. (see the judgment attached)
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.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Business Week in Review with Grant Walker & Andrew Patterson
- The kiwi dollar has spiked against the pound in one of the biggest one day currency moves in history. NBR’s Jason Walls breaks down the dollar’s movement
- What Brexit now means for NZ, with NZIER John Ballingall
- Dr Oliver Hartwich says everyone should stay calm and carry on
- Matthew Hooton on making a moral case for social capital