Troubled Tasmanian timber company Gunns Limited (ASX:GNS) says it will dispute two amended income tax assessments from the Australian Taxation Office.

The two tax amounts, $42.5 million and $22.4 million, relate to a sale and leaseback transaction Gunns entered into in 2007 for the purpose of raising funds. 

However Gunns says the assessments are alternatives and cannot both be correct and considers its own position is correct and supported by law. 

The company plans to make a part payment of the assessments while the matter remains in dispute.

Shares in Gunns last traded at $0.16 before entering into a trading halt on March 8, 2012.

Gunns extended its first half net loss to $173 million in the first half of the 2012 financial year.