Taxman eyes your power rebate

THE taxman has designs on a big chunk of the annual rebate paid to electricity consumers.

Almost half a million customers – a quarter of all power consumers – receive a rebate, effectively giving them back the cash from one power bill.

But that is under threat with a top secret memo revealing Inland Revenue is considering taxing it at 28 per cent.

‘‘It is the Commissioner’s initial revised view that lines companies’ payments of discounts to electricity consumers are not deductible expenses,’’ says the 27-page paper, marked ‘‘classified in confidence’’.

‘‘I think it’s outrageous,’’ said Todd Stevens, a Wellington-based partner with PriceWaterhouseCoopers. ‘‘Tens of millions of dollars will be taken out of the back pockets of hundreds of thousands of families.

‘‘What’s next? Inland Revenue taxing the discounts Briscoes gives every weekend?’’

Inland Revenue wouldn’t comment on ‘‘a small group of taxpayers’’.

Stevens estimated the annual rebate paid to households and businesses to be $87 million, with the IRD eyeing up an estimated $24.4m.

He questioned IRD interpreting the rebate as a distribution of profit, like a dividend.

Stevens said the rebates had been in place for more than 15 years, and were ‘‘an important mechanism to lower household power bills’’.

He doubted whether the Government would want a quarter of all power consumers having increased bills going into election year.