Vector wins tax case over Auckland CBD tunnel payment

Vector Group chief executive Simon Mackenzie (TV3)

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

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.

(BusinessDesk)


This article is tagged with the following keywords. Find out more about MyNBR Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7567 0.0000 0.00%
AUD 0.9753 0.0000 0.00%
EUR 0.6945 0.0000 0.00%
GBP 0.5084 0.0000 0.00%
HKD 5.8650 0.0000 0.00%
JPY 90.0730 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1198.2 -4.740 2015-03-27T00:
Oil Brent 56.4 0.950 2015-03-27T00:
Oil Nymex 48.9 -2.560 2015-03-27T00:
Silver Index 17.1 -0.090 2015-03-27T00:

Indices

Symbol Open High Last %
NZX 50 5833.2 5854.2 5833.2 0.36%
NASDAQ 4863.7 4899.3 4863.4 0.57%
DAX 11920.2 11954.1 11843.7 0.21%
DJI 17673.6 17729.1 17678.2 0.19%
FTSE 6895.3 6910.6 6895.3 -0.58%
HKSE 24541.4 24549.9 24497.1 -0.04%
NI225 19374.7 19590.0 19471.1 -0.95%