18 Aug 2016

Michael Hill pays IRD $30m to end tax dispute

9:18 am on 18 August 2016

Jewellery retailer Michael Hill International has admitted defeat and settled a long running tax dispute with Inland Revenue (IRD).

Michael Hill Jeweller

Michael Hill Jeweller Photo: RNZ / Calvin Samuel

The company will pay $30.3 million in tax and additional charges to end the dispute, which centred on the tax treatment of the transfer of intellectual property to Australia in 2008.

Michael Hill International has already paid $7.7m and will pay the balance from its existing debt facilities, without any impact on its operations or expansion plans.

The company said it was sure it had complied with the relevant tax laws but the longer the issue dragged on the more difficult for investors to keep track and understand the dispute and its impact.

"The Board is now of the opinion that removing the continued uncertainty and the significant cost associated with the dispute, is in the overall best interests of shareholders and that the settlement reached is accordingly a sensible commercial outcome."

The settlement means the company will be able to give tax credits on dividends paid to New Zealand shareholders.

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