More than 340,000 Auckland households will get a $280 payout. Photo / Michael Craig
More than 340,000 Auckland households will get a $280 payout. Photo / Michael Craig
Entrust's annual dividend has tumbled to $280 for 340,500 Auckland households after they got $375 last year.
The community trust is the majority owner of electricity and gas lines company Vector, and will pay out the dividend from today.
Tax changes are the main reason for the cut to thedividend which will be a blow to Aucklanders facing economic fallout from Covid-19. A survey by Entrust last year said 63 per cent of households relied on the payout to meet the rising cost of living in the city.
The trust says it understands many people will be ''disappointed'' by the cut.
In February this year Vector decided to reduce imputation credits on dividends from 28 per cent to 10.5 per cent. This change means Entrust has to pay significantly more tax on the dividend it receives from Vector, resulting in a lower amount paid to Entrust beneficiaries than in previous years.
"In previous years Vector's tax payments minimised the amount of tax Entrust had to pay before distributing its own dividend,'' said Entrust chairman William Cairns.
Cairns said it was a decision made by the Vector board - which includes two Entrust members - to manage its tax obligations efficiently.
''We understand that as a result of Vector's dividend policy, beneficiaries may be disappointed that the Entrust dividend amount is lower than previous years,'' he said.
The number of households in the Entrust area - within the former Auckland Electric Power Board boundaries - has also grown by 4000, meaning it is spread more thinly.
Last year the trust paid $120m but this was down to $95m this year.
Cairns said in the current economic climate, $95 million remains a significant injection into the Auckland economy.
"This year's payment comes at a critical time, following the economic shock of Covid-19 and for many families, every dollar counts in the household budget particularly as other support initiatives are ending, including mortgage holidays and the wage subsidy," said.
Last year's payout included a $15 Transpower payout.
The majority of people have chosen to receive their dividend via direct credit to their bank account, and this has been paid today.
Cheques have also been posted today, and people are advised to watch for it in the mail and allow a few days for New Zealand Post to complete delivery.
Those receiving the dividend as a credit on their power account will see it on the next available power bill."
Entrust owns 75.1 per cent of Vector, which last month reported an after tax profit of $97.3 million for the last financial year.
Entrust chairman William Cairns. Photo / Supplied
The dividend paid out by Vector to all shareholders this year is unchanged from 2019, at 16.5 cents per share.
''We appreciate 2020 has been difficult for many people and are pleased we are able to pay a dividend this year,'' a spokeswoman said.
The company said last year it would review its dividend policy.
''Vector currently has a tax balance credit and so this is a way Vector is managing its tax obligations efficiently.''
Entrust requires Vector to invest $10.5m every year on undergrounding and new energy technologies. There is currently a large-scale undergrounding project in Mt Albert around Carrington and New North Rds under way.
