Tax relief for some former Hanover investors, IRD says

Investors in the failed Hanover and United finance companies who accepted shares of Allied Farmers in a debt-for-equity swap may be entitled to deduct any losses incurred when they sold their holdings, Inland Revenue says.

The investors were issued with Allied shares at 20.69 cents apiece, a price they promptly fell below. Allied’s main business, finance company Allied Nationwide, has since failed and the shares last traded at 4.8 cents. The latest price is a huge gain from the sub-1 cent levels it plumbed before a share consolidation trimmed stock on issue to 90.8 million from more than 2 billion.

Inland Revenue “will consider cases whereby a taxpayer can demonstrate that their main purpose in acquiring the Allied Farmers shares was to resell them,” said IRD group tax counsel Graham Tubb.

The investors would have to show intent to sell the shares as soon as possible after they were issued in 2009, such as sell instructions to their broker.

“The amount of the deduction that may be claimed is likely to be less than the amount that investors may have invested with Hanover and/or United,” the tax department said.

(BusinessDesk)

BusinessDesk.co.nz

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