Tax holiday for forester

http://www.stuff.co.nz/business/industries/9650497/Tax-holiday-for-forester

TIM HUNTER

Last updated 05:00 26/01/2014

One of the country’s biggest forestry companies has paid virtually no tax for more than a decade.

Rayonier New Zealand, a subsidiary of Florida-based forest investor Rayonier, manages about 130,000 hectares of New Zealand forests owned by Matariki Forests Group, itself also owned by the listed Florida company.

Its accounts show a tax expense of just $9000 in the year to December 2012, equivalent to a tax rate of 0.5 per cent on its pretax profit of $1.7 million.

Since 2000, Rayonier has reported cumulative pretax profits of $102.6m and tax expenses of $7.8m, representing an effective tax rate of 7.6 per cent.

Rayonier’s financial statements suggest the origin of the tax benefit was its sale of an MDF plant near Gore in May 1999.

The sale, for an undisclosed sum to a related party in the United States, realised a loss of $36.8m. The plant had been operating for just 20 months after being opened by Rayonier NZ in October 1997.

The Florida group’s 1999 annual report said the plant had experienced losses because of weak demand from Asian markets and worldwide overcapacity in MDF. However, it said improved volume and prices were expected.

Rayonier’s US unit sold the plant to Korean company Dongwha in 2005 for $59.2m.

A spokesman for Rayonier, Ange Vivian, said she was not at liberty to discuss the reasons for the company’s apparently low tax payments but it complied with all New Zealand tax laws.

The Inland Revenue had audited Rayonier in 2011 and was satisfied the accounts met its requirements, she said.

“Rayonier is a productive and engaged member of the New Zealand business community. Our health and safety operations are of the highest standard and we are working with others in our industry to identify solutions that will lead to better safety performance across all New Zealand forestry operations.”

The forestry industry has been strongly criticised in recent months by unions and politicians for its safety record. Ten people were killed in forestry operations last year and this month the toll continued with the death of 53-year-old William Bryant at a vineyard in Marlborough.

Forest Owners Association figures show 18 fatalities between 2005 and 2010, a figure that includes the death of 28-year-old Shane Frater in 2009 while working in Rayonier’s Te Awahohonu forest near Napier.

Forest Owners Association spokesman Glen Mackie said any fatalities were unacceptable, but the statistics showed that big companies had a better record.

“Eighty-three per cent of the harvest is coming out of the large forest owners and about 50 per cent of the accidents, so that tells you that 50 per cent of the accidents are coming from 17 per cent of harvest, which is the small woodlot area.”

Council of Trade Unions president Helen Kelly said the organisation would like to see forest owners and managers take more responsibility for health and safety by adopting a minimum set of terms and conditions for forestry workers industry wide.

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