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Heartland's 2012 profit to be boosted by tax law change

Heartland Building Society says a law change means its 2012 net profit will be boosted by a one-off tax credit likely to be between $5 million and $6 million.

Thursday, August 18th 2011, 2:46PM

by Jenny Ruth

The company has previously forecast net profit for the year ending June 2012 will be between $20 million and $24 million following the acquisition of PGG Wrightson Finance.

This will be boosted by a deferred tax benefit which results from a retrospective law change just enacted by Parliament, Heartland says.

"This bill (the Taxation [tax Administration and Remedial Matters] Bill) contains a retrospective legislative change in relation to mergers of building societies which will apply to the Heartland merger," it says.

Heartland was created in January this year from the merger of Marac Finance, Canterbury Building Society and Southern Cross Building Society.

"The change means that mergers of building societies are now subject to rollover relief for tax in the same way as company amalgamations," Heartland says.

"The result is that the benefit of future tax deductions, which were lost on the Heartland merger, are now available to the HNZ group and cash that would otherwise have been required to pay tax will now be available to the HNZ group."

Tomorrow, Heartland is due to report its annual results for the year ended June this year. Its existing guidance is a result between $6 million and $8 million.

The company says it will update its 2012 guidance after the end of the September quarter.

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