Trustpower in trading halt as it awaits Supreme Court ruling on IRD dispute

Wednesday 27th July 2016

Trustpower is in a trading halt as it awaits a Supreme Court ruling on its dispute with the Commissioner of Inland Revenue, due to be released today.

The electricity generator and retailer controlled by Infratil asked the country's highest court to overturn a ruling from the Court of Appeal in the tax department's favour, which quashed a High Court decision siding with the power company and confirmed IRD's disallowing of deductions on $17.7 million of feasibility expenditure claimed in the 2006, 2007 and 2008 financial years.

In a statement to the NZX, the company said the halt would "allow the decision to be appropriately released to all investors and allow Trustpower to give its initial assessment of the impact of the decision."

The disputed expenditure arose from Trustpower taking preliminary steps then applying for and obtaining resource management consents over four potential generation projects in the South Island, being two wind farms and two hydro. The consents covered land use, water permits and discharge permits, and were for fixed periods.

The appeal court bench also remitted back to the High Court the allocation of some spending as capital rather than revenue in relation to the application of four resource consents.

The power company's forecast exposure for those years was tax payable of $5.9 million and interest of $2.9 million. Adding in later years takes the exposure to a total $10.6 million plus $4.3 million in interest.

When it was considering appealing the ruling in 2015, Trustpower said the tax payable would largely be an adjustment on the balance sheet unlikely to exceed $2.5 million for all of the years up to March 2015, while the interest cost would be an income statement expense. The costs awards weren't able to be quantified, it said.

Trustpower shares last traded at $8.20 and have gained 10.7 percent this year.

BusinessDesk.co.nz

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