Property trust liability to rise

ING Property Trust's deferred tax liability is to rise by about $96.8 million after tax changes relating to the removal of depreciation of building structures announced in the Budget in May.

An announced reduction in the corporate tax rate would result in a slight reduction in that figure, the company said this week.

A corresponding increase in deferred tax expense would be shown in profit and loss figures.

It was a non-cash adjustment and would not form part of the calculation of the distributions available to unitholders under the terms of the trust deed.

Because the Budget announcement was made following the trust's financial year end of March 31, the deferred tax adjustment would be recognised within the current year financial results.

Manager Peter Mence also noted that an Inland Revenue review of tax rules affecting building fit-outs had lifted a great deal of uncertainty from the property sector.

IRD's policy advice division and the Treasury released a tax policy issues paper last week dealing with the tax treatment of non-residential building fit-outs, following the changes to the tax rules on depreciation of assets announced in the Budget.

The recommendations now being made by the IRD and the Treasury were a further step towards providing some clarification around the impact of policy changes on the treatment of property for taxation purposes.

- NZPA