Tuesday, 19 February 2019


GENERAL: THL: US Tax Legislation Change

21 Dec 2017 15:16NZX
21 December 2017


US Tax Legislation Change

The new tax legislation in the USA has been approved by the House and Senate
and is expected to be signed into law by the President shortly.

The legislation is a complex document. Late changes made up until the time
of passing mean that a full definitive financial analysis of the impact on
thl cannot be accurately quantified at this stage.

The following is a summary of the main changes that are expected to impact
the reported financial results of Tourism Holdings'' US-based businesses,
based on advice received to date:

Income Tax Rate Impact on Net Profit After Tax

The federal income tax rate will reduce from 35% to 21%.  Based on the
current distribution of thl earnings across US States, and the current State
tax rates, the effective total income tax rate including State taxes for thl
in the USA is expected to reduce from around 40% to around 27%.

The new income tax rate is effective from 1 January 2018, however it is not
clear at this stage whether there is an impact on thl tax expense in the
current financial year ended 30 June 2018 (FY18), apart from a one-off
deferred tax balance adjustment.  This requires both detailed analysis of the
legislation and guidance on interpretation from the Internal Revenue Service.

The first full year in which the lower federal tax rate will apply to thl is
expected to be the year ended 30 June 2019 (FY19).  The positive annual
recurring financial impact of this change on reported Net Profit After Tax,
based on current levels of earnings and current exchange rates, is expected
to be in the range of NZD $2.3M-$3.0M.

100% Deductibility for Capital Asset Purchases

The new legislation increases and extends the ''bonus depreciation'' claimable
for the purchase of new capital assets.  New qualifying assets, which we
understand includes RVs, will be subject to 100% deductibility in the year of
purchase for tax years until 2022.  The full deductibility of fleet asset
purchases will have the effect of deferring tax cashflows, but will not
impact income tax expense.

Adjustment to Deferred Tax Liability Balance

Due to the change in tax rate, the Deferred Tax Balance (a liability) will be
adjusted to reflect the tax rate change at the date of enactment.  This will
result in a one-off positive adjustment to FY18 reported Net Profit After
Tax. The quantum of this one-off adjustment cannot be accurately forecast
until we can fully determine how rates will be applied between now and FY19.

A further update will be provided once further analysis is complete, likely
to be at the time of our interim results release in late February.


Authorised by:

Rob Campbell
Chairman, Tourism Holdings Limited

For further information contact:

Grant Webster
thl Chief Executive Officer
Direct Dial: +64 9 336 4255
Mobile: +64 21 449 210
End CA:00312351 For:THL    Type:GENERAL    Time:2017-12-21 15:16:41
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