Queenstown Airport in High Court fight to keep $2.7 million tax deductions

Monday 14th March 2016

Queenstown Airport's runway end safety area is more than just land and the airport should be able to claim depreciation for its construction, it has claimed in Wellington's High Court this morning.

The airport is in dispute with the Inland Revenue Department over whether it should be able to claim depreciation on the runway end safety area (RESA) at the eastern end of its international runway for the 2012 and 2013 tax years, and in the future. At issue is whether improvements on the land qualify as being tax deductible.

Michael Lennard, counsel for the airport, told Justice Brendan Brown that the area in dispute had been engineered, so it wasn't simply land and excluded from depreciation.

The legislation makes an allowance for depreciation on airport runways to be claimed, and Lennard said the RESA was part of the "entirety of the runway system" which is a sophisticated engineered structure including taxiways and aprons where planes park.

Lennard also said he didn't need to establish that the area did decline in value, only that it could be reasonably expected to depreciate. He said the 100-year design life given by the RESA's engineers showed depreciation could be expected.

The hearing is set down for three days, and the airport will call four witnesses, including two expert witnesses.

In its 2015 annual report, the airport said it would cost about $2.7 million in deferred tax liability if it lost the case against the IRD. However, it said it had received advice the dispute "would be resolved in its favour."

The trial is continuing.

BusinessDesk.co.nz

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