Qantas earmarks $10.3m for NZ tax issue
Tuesday 8 Jan 2013 10:22 a.m.
Qantas Airways has ring-fenced $10.3 million to cover any penalties in its disputed tax case with the Inland Revenue Department.
The airline's New Zealand subsidiary Jetconnect, which manages the group's trans-Tasman passenger schedule, elected to use "tax losses within the Qantas Group against the shortfall penalties assessment" imposed by the IRD, according to financial statements lodged with the Companies Office.
New Zealand's tax department is seeking to deny interest deductions claimed on convertible notes which were used to fund Qantas's former interest in rival carrier Air New Zealand.
"In the event the optional convertible notes dispute is found in favour of the company, the losses utilised against the above mentioned shortfall penalties will be reinstated to the group," the company said.
The IRD contends the hybrid securities, which let companies juggle equity and debt to provide a tax advantage, were structured purely to minimise tax.
The tax department has previously won a High Court ruling in favour of its assessment of the notes against Western Australia's Alesco Corp, and is waiting on a Court of Appeal decision after a hearing last year.
The New Zealand subsidiary reported a 6.2 per cent fall in profit to $10.6 million in the 12 months ended June 30, on a 3.3 per cent decline in revenue to $75.1 million, the financial statements show.
The local unit paid an $88 million dividend to its Australian parent in the 2011 year, though no return was made in the latest period.
Sister New Zealand unit, Jetstar Airways, which employs and hires cabin and technical crew for budget brand Jetstar Airways Pty Ltd, made a profit of $1.9 million in the June year, from $1.4 million a year earlier, according to separate financial statements