In an important test case, Richard Branson’s Virgin has lost against the
Australian Tax Office (ATO) over its attempt to avoid a tax payment on $A90m
worth of dividends from the investment of two of his companies in Australian
budget airline Virgin
The High Court of
Australia ruled that Virgin Blue was liable to pay tax on the dividends
before sending the money to the Swiss-based Virgin Group companies, Cricket SA
and Virgin Holdings SA, in December 2005.
ATO argued the payment of a $A72.5m (?31.1m) dividend to Cricket and $20.8m
to Virgin Holdings via round-robin transactions to related companies were just a
ruse to avoid paying Australian tax.
The case is an important test of the Tax Office’s ability to challenge
complex corporate financial transactions, Sydney paper Sydney Morning
Herald reports. The tax has been kept in a bank, earning interest while the
outcome of Virgin’s appeal was pending.
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