Waipa Networks Trust Payout |
|
Notes:
|
|
$21.25M Payment for Waipa Networks Trust Waipa Networks has announced that it will increase the size of its tax free distribution to the Trust from $20M to $21.25M. In announcing the payment, Company Chairman, Diane Reed said "It has been a long and protracted process to ensure the money could be paid out tax free." "The issues were complex and went back to the formation of the Company in 1993. Our staff, advisors and the Inland Revenue Department have worked exceedingly long and hard to resolve the issues and it is very pleasing that this satisfactory outcome has been achieved", said Ms Reed. "I am aware that there has been some criticism of the delay that has occurred", she said. "However, now that we have got through the process, it is difficult to see how we could have finalised it sooner without putting at risk a third of the payout". "Following receipt of the IRD clearance, the company has proceeded as quickly as possible to repurchase some of its shares from the Trust for $21.25M", she said. "The repurchase of the shares is a formality required to ensure that the payment is tax free and will not change the ownership of the Company." The Company is 100% owned by the Waipa Networks Trust and the Trust is elected by the connected consumers every three years. Waipa Networks Trust Chairman, Chris Firth said that the Trust has been making preparations to pay a special payment to the connected consumers of Waipa Networks. "Cheques should be mailed out by the end of February with most qualifying consumers receiving $1,060", said Mr Firth. "The qualifying date will be 1 November, 2000 which is the same date used for paying the dividend last December", he said. "Some consumers have expressed a concern regarding the interest earned on the money prior to it being paid to the Trust’s beneficiaries. All interest earned on the money invested by the company is paid out to the Trust in the year in which it is earned and distributed by the Trust in its dividend cheque paid just before Christmas each year", he said. Mr Firth praised the Company for "the prudent manner in which they have tackled this complex tax issue. It shows our consumers the acumen of the company Directors," he said.
At the end of 1999 Waipa Networks decided in principal to pay a special one off tax free dividend of about $20M to the Waipa Networks Trust who own 100% of the Company’s shares. The Company sought tax advice from PricewaterhouseCoopers. Their advice was to seek a ruling from the Inland Revenue Department on the amount of capital that could be paid out without incurring a tax liability. That work commenced early last year and concluded on 22 December 2000 with advice that the company could make the special tax free distribution by purchasing some of the shares held by the Trust. The amount which could be paid tax free was limited to $21.25 and the Company decided to increase the payment to the Trust. Following receipt of the IRD clearance, the Company’s solicitors prepared the documentation required to comply with the binding ruling and for the repurchase of the Company’s shares. The issues which had to be grappled with by the IRD were complex and required extensive research into the establishment of Waipa Power Limited from the Te Awamutu and Cambridge Electric Power Boards in 1993. At the time the Company requested the ruling from the Inland Revenue Department no one anticipated the complexity or the time that would be involved in the process. Had it not been possible to pay the money tax free then up to $6.6M may have been lost in tax on the original $20M payment. Comment from Bruce Owen, Waipa Budget Advisory Service Co-ordinator It will be very tempting for people to rush out and spend their cheque on something special, but consideration should be given to paying off debt which attracts high interest. Credit cards are the big one here. The interest on $1,000 will be about $16 a month on current interest rates. Better to get rid of this and spend the savings on something extra each week. Another idea for those who are paying $20 or more a week to have their lawns mowed because they do not own a mower is to spend half of the cheque on a new mower, and again use the savings each week. Another good option is to pay off any hire purchase which again has high interest charges. If you do, remember to ask how much the refund will be, as there normally will be one depending on how far through the term of the contract you are. But don't be too mean!! Shouting the kids to the movies or a special family treat you have not been able to afford is a good idea as well.
|
