A bill for A$51.8m will shortly be arriving at the door of Perth-based Foodland Associated, following accusations from the Australian Taxation Office (ATO) that the wholesaler and retailer has so far avoided paying the tax on two corporate transactions made in New Zealand eight years ago.
Foodland denies the charges, however and yesterday (1 February) general manager Chris Bennett revealed that the company’s tax counsel believes it has a good case against the ATO and will vigorously defend the matter. Payment will not therefore reach the office until all appeals are exhausted
The bill has been calculated by the office using Part 4A of the Income Tax Assessment Act. Thus while A$27m is the outstanding tax total, penalties and interest on years of late payment have bumped up the bill by an extra A$24.7m.
This calculation is also the source Bennett’s confidence: “We have a very strong position on the grounds that basically Part 4A of the Act doesn’t apply because these transactions were bona fide transactions involving real companies.”
Those transactions in question are the takeover of Farmers Deka and the 1993 deal that made Progressive Enterprises a majority owned Foodland subsidiary.
