Bay of Plenty power generator and retailer Trustpower has decided to seek leave to appeal to the Supreme Court the Appeal Court judgment on its Inland Revenue Department case on feasibility expenditure.
"There's obviously quite a bit of interest in the case," said chief executive Vince Hawksworth. "Quite a few of the legal and tax accounting firms have been expressing views on the implications of the decision."
Greg Harris, a tax partner in the Hamilton office of Deloitte, commenting last month on the Court of Appeal result, said it demonstrated the willingness and resources of the IRD to pursue what they believed was right.
In question was the tax treatment of approximately $17.7 million spent from 2006 to 2008 by Trustpower in taking preliminary steps for four possible new electricity generation projects in creating its development pipeline. The earlier High Court decision agreed with TrustPower's treatment to fully deduct the costs of resource consents obtained for tax purposes, with the amounts being treated as feasibility expenditure incurred in the course of generating revenue.
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Advertise with NZME.The IRD disagreed, saying the amounts were capital expenditure, not immediately tax deductible, and should come under the depreciation regime. Trustpower was widely expected to appeal the decision and confirmed the move at last Friday's annual shareholders meeting.
"We've sought leave to appeal, and if permission is granted, we will go from there," said Mr Hawksworth. If leave to appeal was granted, both sides would submit statements, then the Supreme Court would decide whether or not it wanted to hear the case. There are a number of tests, one of which is whether a case is in the public interest."
Mr Hawksworth said he believed it was likely to be heard by the Supreme Court.
