Auckland CCOs will not pay more tax

Local Government Minister Rodney Hide and Revenue Minister Peter Dunne have rejected suggestions that the new structure of the Auckland Council would result in an increased tax liability.

“The assertions made in a NZ Herald story today do not consider the overall position of the new council and make unwarranted assumptions about matters that have yet to be determined. The story raised an important issue but its reporting on the facts ignores essential points: tax losses have not been taken into account, the government is committed to ensuring there is no increase in tax liability, and decisions are not yet made,” say Rodney Hide and Peter Dunne.

Revenue Minister Peter Dunne says that, while it is possible that some current non-taxable activities will become taxable, significant prior and ongoing tax losses will be offset against taxable income in the future.

“It is expected, that on the basis of published accounts, the combined councils will have existing losses of over $100 million and that ongoing losses will easily offset any new tax exposure,” says Peter Dunne.

Rodney Hide says no decisions have yet been made on taxation issues for the final structure of the Auckland Council. “Ministers are still looking at these issues. One of the key considerations ministers will take into account is that restructuring should not result in any increased tax liability for the new Auckland Council structure.”

A report in the New Zealand Herald today suggests that the establishment of new CCOs under the new Auckland Council structure will result in an increased tax liability that will need to be recovered through higher council charges or rates.

The Ministers say the story is based on the false assumption that CCOs will make significant profits, and will not be able to take into account existing and future losses on operations.

ENDS

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