Tax-free Unison cheque arriving before Christmas

A tax-free cheque is coming for electricity account holders in Napier and Hastings, says Hawke's Bay Power Consumers' Trust Chairman John Newland.

A cheque for $150 will be posted late this month to more than 55,000 electricity account holders in Napier and Hastings, injecting almost $9 million into the local economy.

The cheque is from the Hawke's Bay Power Consumers' Trust dividend distribution from consumer-owned Unison Networks.

Trust chairman John Newland said the $150 payment was tax free.

He said a leaked Inland Revenue memo, which revealed the government department was considering taxing electricity dividends at 28 per cent, did not apply to Hawke's Bay.

Mr Newland said Inland Revenue was focusing on distributions from electricity trusts because some people were not aware of the tax liability associated with their dividend payment.

"Some trusts have chosen to distribute their dividend receipts as a rebate in the form of a credit to consumers' electricity accounts," he said.

"As we have considered various options, we have recognised that this option was not sustainable.

"As the information sent with our cheques details, there are tax credits applied to our gross dividends and withholding tax paid, so that the dividends received by our consumers are tax free."

Apart from the dividend cheques, the trust allocates $1.5 million to supplement Unison's programme to put overhead electricity lines underground.

It also gives $400,000 to a programme to insulate local homes towards improved health and energy efficiency.

Unison owns the electricity distribution networks for Napier, Hastings, Rotorua and Taupo but about 10 per cent of its profit comes from its subsidiary companies: Unison Fibre, Unison Contracting Services, Unison Insurance and transformer manufacturing business ETEL.

ETEL was purchased in 2009 and this year the Auckland-based company bought an Indonesian transformer manufacturing business, opening up potentially lucrative supply contracts to the world's fourth-most-populated nation.

As an ASEAN nation, it opens up further trade opportunities through transfers of New Zealand transformer technology.