Cavalier Corp Ltd said the benefit from the reduction in the corporate tax rate in the government's budget will be more than offset by the impact of the removal of the ability to depreciate buildings and the removal of a depreciation loading for certain a
Cavalier Corp Ltd said the benefit from the reduction in the corporate tax rate in the government's budget will be more than offset by the impact of the removal of the ability to depreciate buildings and the removal of a depreciation loading for certain assets.
In its budget on May 20, the government announced the reduction in the corporate tax rate from 30% to 28% and removed depreciation for tax purposes for buildings. Both measures take effect from July 1, 2011.
A number of companies have disclosed an increase in deferred tax liabilities resulting from the changes.
Cavalier Corp said the group's deferred tax asset will decrease by an estimated $4m, while deferred tax liabilities at 50%-owned Cavalier Wool Holdings Ltd will rise by $2.6 million.
Together they will decrease the current year's tax paid result for the group by $5.3 million.
These adjustments are one-off accounting entries and have no impact on underlying profitability, cash flows, dividend policy or financing covenants.
