Tower bags $22 million tax windfall
The Inland Revenue Department (IRD) has been forced to repay $22 million to Tower Financial Services Group following a landmark decision in the full Court of Appeal.
The Inland Revenue Department (IRD) has been forced to repay $22 million to Tower Financial Services Group following a landmark decision in the full Court of Appeal.
Tower has been disputing an IRD tax assessment of $33 million made against Tower Insurance following the 1987 sale of its 30 per cent interest in financial serv-ices company Southpac.
The long running court battle finally appears to be over with all five appeal judges finding in favour of Tower and the IRD indicating there will be no appeal to the Privy Council.
While the case was in dispute, Tower had to pay $16 million to the IRD which will now be repaid along with the $6 million interest gained over the period.
James Boonzaier, group managing director of Tower, says the case has important implications for the tax treatment of insurance companies when disposing of strategic assets for the benefit of their capital account.
"It has been very satisfying to have such a crucial issue resolved in this way, and at this time. Of course, Tower now will benefit by $22 million, which liter-ally is an extraordinary windfall," Boonzaier says.
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