Tax tussle’s turbulence for Queenstown Airport

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Not a runway: Queenstown Airport's embankment

Queenstown Airport – three-quarter owned by local ratepayers – has lost its appeal in pursuit of a multi-million dollar tax rebate.

The airport company spent $8.5 million building an embankment over a 45-metre drop-off to the Shotover River, at the eastern end of the runway.

It created space for a ‘runway end safety area’ (RESA), should any aircraft overshoot or undershoot the runway.

The company wanted a $2.64m tax rebate, claiming the RESA is part of the runway area or ‘hardstanding’ and therefore a depreciable asset.

But the tax commissioner, a High Court judge, and now three Court of Appeal judges disagree.

Justice Anthony Randerson outlined the reasons in a written judgment after an Appeal Court hearing on February 8.

He says the runway itself – used by 8000 aircraft a year, including 70-tonne Airbus A320s – will need resurfacing every five to 10 years.

“In contrast, the eastern RESA does not form part of the runway either in its natural meaning or under the Civil Aviation Rules.

“Nor is it intended or available for use by aircraft taking off or landing other than for use for safety reasons in an emergency.”

Randerson says the design life of the RESA is 120 years, after which one of its components will need replacing.

It’s also not ‘hardstanding’ as it can only be used in emergencies.

“We agree with the commissioner’s submission that the RESA and supporting embankment effectively created new land as engineered fill.

“In that respect, the RESA may be regarded as similar to a reclamation in which dry land is created from land formerly inundated by the sea or by a body of fresh water.”

Airport lawyers appealed Justice Brendan Brown’s High Court decision.

They argued he’d lost sight of the overall question of whether the RESA was a depreciable asset, focusing instead on the details of runways and land improvement.

The Appeal Court disagreed, saying he’d taken the correct approach.

Queenstown’s council is a 75.01 per cent shareholder in Queenstown Airport Corporation. Auckland Airport owns the balance.

paul.taylor@scene.co.nz