TrustPower in tax battle over treatment of resource consents
A tax expense of up to $3.3 million is possible if a dispute with the Inland Revenue Department goes against it.
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BUSINESSDESK: TrustPower may have to record a tax expense of as much as $3.3 million in its income statements if a dispute with the Inland Revenue Department goes against it, shareholder Infratil says.
The contingent liabilities section of the Infratil annual report discloses that IRD is disputing the tax treatment of feasibility expenditure booked by TrustPower in 2006, 2007 and 2008.
TrustPower disagrees with IRD and is defending its position.
Infratil says that if TrustPower loses it may have to pay taxes of $5.9 million and interest of $2.8 million for the 2006, 2007 and 2008 financial years.
If TrustPower has to revise its policy for capitalising the cost of resource consents for tax it will also face a tax payment of $4.1 million and interest expense of $0.8 million in respect of the 2009, 2010, 2011 and 2012 years.
The tax dispute would primarily result in balance sheet adjustments, Infratil said.
The impact on the income statement was difficult to estimate but it was "unlikely to exceed $3.3 million" for all years up to 2012 because the initial expenses are eligible for depreciation charges, which would partially offset the additional tax charges.
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TrustPower in tax battle over treatment of resource consents
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