TaxCorporate TaxRio Tinto ends £218m tax dispute

Rio Tinto ends £218m tax dispute

Mining giant hammers out a favourable resolution to a five-year franking credits wrangle with the Australian Tax Office

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
franking
credits
.

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.

Further reading:

Offshore billions could return

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

1w Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2w Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2w Alia Shoaib, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

1m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

2m Emma Rawson
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3w Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

3w Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3w Austin Clark, Reporter