I said in an earlier article that the Budget-announced changes to depreciation were nuts …
Kiwi Income first to reverse IAS12 tax liability – unitholder funds up $214 million
Kiwi Income Property Trust is the first New Zealand listed property entity to reverse the deferred tax liability that sent so many entities spiralling to huge paper losses.
The reversal comes about through an amendment by the International Accounting Standards Board to IAS12 – income taxes.
The unintended consequence of large writedowns under IAS12 arose out of the Government’s decision in its 2010 Budget to strike out depreciation allowances on building structures (or building shells). As a result of that change, building owners such as Kiwi Income were required to provide for a deferred tax liability which wouldn’t crystallise even if their properties were sold.
For Kiwi Income, the amendment will have the effect of reversing the one-off deferred tax liability of $143.9 million (with a corresponding decrease in deferred tax expense) recognised in the trust’s financial statements for the September 2010 half-year which arose as a result of the removal of the depreciation deductions.
In addition, previously recognised deferred tax liabilities in respect of unrealised revaluation gains & deductible capitalised costs of $69.9 million (as at 30 September 2010) will also be reversed. The net effect of these entries will be an increase in unitholders’ funds of about $214 million. …
Read on at Bob Dey Property Report