Foster's To Challenge ATO Over Tax Claim

by Mary Swire, Tax-News.com, Hong Kong

26 September 2006

Foster’s Group, the international beverage company, has announced its intention to appeal a back tax claim by the Australian Tax Office (ATO) relating to the funding of a subsidiary in the 1980s and 1990s.

In an announcement on Monday, Foster's explained that the assessment related to the availability of tax losses arising from deduction claims in respect of the funding of the Elders Finance Group.

Foster's also noted that other companies within the group were potentially exposed to the possibility of similar assessments relating to the 1998 to 2004 income tax years.

At the time of the announcement, Foster's noted that the tax losses concerned were the subject of an ongoing audit by the Australian Tax Office, and that the Commissioner of Taxation was yet to determine whether any additional assessments would be raised.

Foster's has now been advised by the Commissioner of Taxation, Michael D’Ascenzo, that he may raise additional assessments in relation to the funding of the Elders Finance Group in respect of the 1995 to 2004 income tax years, increasing the total potential primary tax exposure of Foster's from $237 million to $379 million. An additional unquantified amount of penalties and interest charges may also be assessed, subject to the discretions available to the Commissioner of Taxation.

Foster's said that it "remains confident" of the position it has adopted and intends to "vigorously defend" the deduction claims.

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