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Hot Topic NBR Focus: GMO
Hot Topic NBR Focus: GMO
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Telecom budgets for $38m tax change hit

Tax changes are expected to increase Telecom's tax expense by about $38 million in the 2010 financial year, and by $20m to $30m the following year.Telecom today joined the list of companies indicating how they expect to be affected by the removal of the a

NZPA
Tue, 13 Jul 2010

Tax changes are expected to increase Telecom's tax expense by about $38 million in the 2010 financial year, and by $20m to $30m the following year.

Telecom today joined the list of companies indicating how they expect to be affected by the removal of the ability to claim tax depreciation on buildings, and by a fall in income tax from 30 percent to 28 percent. Both changes come into effect from Telecom's 2012 financial year.

Adjusted group net earnings for 2010 were now expected to be near the lower end of a range between $362m and $402m, having previously been expected to be near the lower end of a range between $400m to $440m, Telecom said.

The adjusted effective tax rate for 2010 was now expected to be around 30 percent, from 25 percent expected earlier.

In 2011, there would probably be an additional one-off $20m to $30m tax payment and tax charge, resulting in an effective tax rate of around 37 percent.

"Naturally Telecom's shareholders will not welcome the impact of these tax law changes," Telecom chief financial officer Russ Houlden said.

Telecom shares (NZX: TEL) were flat at $1.95 in mid-morning trading in line with the broader market.

NZPA
Tue, 13 Jul 2010
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Telecom budgets for $38m tax change hit
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