Rio Tinto has avoided paying the lions share of a disputed £218m tax
bill after coming to an accord with the Australian Tax Office.
In 2002, the ATO claimed that the mining company owed it more than AUD$500m
in relation to ‘certain transactions undertaken in 1997 to acquire
In August 2003 as required by Australian tax law and practice, Rio Tinto made
a part payment of AUD164m pending resolution of the ATO’s claims. At the mining
company’s 2006 year end, the net amount in dispute, including additional tax,
penalties and interest, stood at approximately AUD$515m.
The FTSE 100 mining giant said today: ‘The agreed settlement, made without
any concessions or admissions of liability by either Rio Tinto or the ATO, will
involve the ATO repaying the amount of AUD$42m from Rio Tinto’s part payment of
AUD$164m; the ATO retaining the balance of AUD$122m and Rio Tinto cancelling net
franking credits of AUD$48m. The settlement will have no impact on the
expectation that Rio Tinto Limited will be in a position to pay fully franked
dividends for the reasonably foreseeable future.’
Rio Tinto added that the settlement would result in a charge to earnings of
approximately US$46m (based on an exchange rate of AUD$1.00/US$0.8406)
which will be reflected in Rio Tinto’s 2007 half year results as an item
included in underlying earnings.
Does Darwin's theory apply to taxation? Colin ponders...
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