The claims from the ATO relate to the deductibility of bad debts involved in its failed Beenup mineral sands and its hot briquetted iron plants, both in Western Australia. The tax assessment is comprised of $570.5 million for primary tax and interest and penalties of $365 million.
BHPB is expected to lodge a complaint with the ATO today and is reportedly considering further action in the Federal Court.
According to a Bloomberg report, Morgan Stanley analyst, Craig Stanley, said he expected the company would go to great lengths to achieve a positive outcome and would not be surprised if the dispute took more than 10 years to settle. BHPB's London-based spokesman Mark Lidiard said the company had "made provisions" for the tax assessment.
The tax claim is in relation to its subsidiary BHP Billiton Finance and refers to the 2000, 2001 and 2002 financial years. In 2000 the company wrote-off $US474 million after tax from it HBI plant, while in 1998 and 1999 the company recorded further tax write-offs relating to the assets of Beenup project – believed to be around $US99 million after tax.
The tax bill is said to be on of the biggest in Australian corporate history surpassed only by a $3.5 billion bill issued to Industrial Equity in the early 90s that is currently before the Federal Court.
A BHPB spokesman also told London paper, The Guardian, that the dispute would not impact on the company's "operations, investment program, or ability to pay dividends."
Shares in BHPB were trading down 29c in morning trade at $17.50 after closing down 32c yesterday at $17.79.
