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BHP Billiton Rejects ATO Assessment

by Mary Swire,, Hong Kong

04 December 2007

Australian industrial group BHP Billiton Limited has announced that it intends to fight the Australian Taxation Office (ATO) in relation to a A$734 million claim for back taxes relating to a failed section of its business.

The ATO has issued assessments and is in dispute with BHP Billiton and its subsidiary company, BHP (Direct Reduced Iron) Pty Ltd with regard to capital allowances claimed in the tax years from 2000 to 2006.

BHP Billiton maintains that it is entitled to the tax relief claimed during this time in relation to Boodarie Iron (Australia), which ceased operations in August 2005. But the tax office insists that the company owes primary tax of US$336 million (A$384 million) and interest (net of tax) and penalties of US$307 million (A$350 million).

In a statement issued on December 4, BHP Billiton revealed that it has taken legal advice, remains confident of its position and intends to "vigorously defend the assessment".

"The outcome of the dispute is unlikely to be known for some time," the statement explained, continuing: "In the meantime BHP Billiton believes that the matter is adequately provided for in the accounts."

BHP Billiton made a previous announcement, in June 2005, that the ATO had issued assessments against BHP Billiton Finance Limited relating to the cost of funding the Boodarie HBI plant. That matter is currently before the Federal Court of Australia.

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