ATO says NO SMOKING..!!
The ATO has won a Federal Court case against British American Tobacco and is looking to reap a tax bill of $89m.
The $89m comprises of $42m capital gains tax liability plus $11m of penalties and $36m of interest.
The Federal Court case relates to the sale of nine cigarette brands in 1999 as part of the worldwide merger of British American Tobacco plc and Rothmans International BV.
Justice Arthur Emmett confirmed that the asset sale fell foul of Part IVA (Anti-tax avoidance provision) because the arrangement was predominatly designed to gain a tax benefit.
In summary, the arrangement allowed the capital gains on the sale to be rolled over to the parent company which at the time had accumulated capital losses.
The capital losses was then offset against the profits on sale resulting in no capital tax payable.
This case is related to a transaction in 1999. So, it is evident that the ATO is becoming more willing to use Part IVA to keep corporate Australia on their toes.
Regards,
Taxabull Team
Source:
Article by Elisabeth Sexton for SMH BusinessDay on 23 Dec 2009
Similar Posts:
- ATO vs Symone Anstis case dispute continues..!!
- ATO ALERT: Data-matching program targeting car sales
- Its official!! The results are out for Federal Commissioner of Taxation vs Symone Antis!!
