Tax law changes to impact Port of Tauranga’s net profit in the 2024 financial year

Port of Tauranga is New Zealand's biggest port and main export gateway. Photo / Mike Scott

NZX-listed Port of Tauranga says changes to tax legislation will result in a $12.9 million hit on its group net profit after tax in the 2024 financial year.

Chief executive Leonard Sampson said in a statement to the NZX the law change for depreciation on commercial buildings would result in the company recognising a one-off deferred tax expense for the year ending June 30.

The change would reduce reported profit for the period, he said.

“This one-off accounting adjustment will reduce our final reported profit but has no impact on cash flows.

“We still expect to deliver a normalised 2024 operating profit in line with our previous guidance of $95m to $107m,” Sampson said.

The deferred tax position on commercial buildings had become complex due to multiple changes in tax legislation, he said.

In 2010, the ability to claim depreciation deductions was removed. In 2020 it was reinstated as part of the Covid-19 response, and then removed again in March 2024 by the new coalition Government, he said.

The legislation change affected all commercial buildings with an estimated useful life of 50 years or more.

The implications for Port of Tauranga varied, depending on when building expenditure occurred.

“Since the latest legislation was passed at the end of March, Port of Tauranga has undertaken the required recalculations and had them reviewed for compliance by an external adviser,” Sampson said.

New Zealand’s biggest port and main export gateway will announce its annual financial results for FY24 on August 23.

Port of Tauranga’s late morning share price on Thursday was 10c or 1.89% down at $5.20.