Tax changes in the Government's May Budget have had an impact on the Waitaki District Council-owned Whitestone Contracting Ltd, turning what would have been a surplus into an after-tax deficit.
At first glance, the contracting company appears to have not had a good year, notching up a $76,761 loss on operating revenue of almost $20 million for the 2009-10 financial year.
But closer scrutiny of its accounts shows the company could have returned a profit of more than $150,000, were it not for an extra tax burden of about $200,000.
That extra tax is a result of changes made in this year's Budget introducing new international financial reporting standards for companies, eliminating tax deductions for buildings with an expected life of 50 years or more.
In Whitestone's case, it shows income tax at $388,496 - about $239,000 a "book entry"of deferred tax liability due to the change in accounting standards.
In previous normal years, Whitestone has paid tax of about $170,000.
Whitestone's 2009-10 financial report goes to the council meeting tomorrow.
It shows $19.970 million in operating revenue, compared with almost $21.5 million in the 2008-09 financial year.
Operating expenses were $19.563 million ($20.5 million in 2008-09), giving an operating surplus of about $366,000 ($901,702 in 2008-09).
The company gave sponsorships, including supporting the Oamaru Opera House auditorium, of $54,324 to community groups, leaving an operating surplus before tax of $311,735.
In the previous financial year, it had an operating deficit of $377,120 after making a $1.144 million subvention payment to the council.
Taxation totalled $388,495 (tax credit of $65,971 in 2008-09), including the deferred tax, leaving a net deficit of $76,761.
Whitestone chairman John Walker said the company achieved a profitable position before tax, after recording a half-year loss.
The market had been very competitive, but Whitestone had remained profitable except for the deferred tax under new reporting standards which had distorted the result.
One of the highlights of the year was the prompt response to major flooding which hit the district in May with staff and equipment based locally.
