Bega owes $13m in tax: ATO

Tax office says Bega subsidiary was not a co-operative company for three years.

A Bega Cheese (BGA) subsidiary owes more than $13 million in additional tax, the Australian Tax Office says.

The dairy group claimed deductions which the tax office said are not allowable.

The ATO said Tatura Milk Industries, a wholly owned Bega subsidiary, was not a co-operative company for income tax purposes in the 2009, 2010 and 2011 financial years.

Deductions claimed by the dairy group for dividends paid and loan repayments made are not allowable, meaning additional tax of $13.34m is payable, the ATO said.

In a statement, Bega said the subsidiary believes the deductions were allowable and plans to make further submissions to the tax office.

If amended tax assessments are received, Bega will consider further action to protect the interests of shareholders, the dairy group said.

Bega reported an 18% lift in first-half profit last month to $18.7m, boosted by strong dairy commmodity prices.

The dairy group was also an unsuccessful bidder for Warrnambool Cheese and Butter Factory Company Holdings, after Canadian dairy giant Saputo beat Bega and Murray Goulburn to win control of the target.

After pulling out of the takeover battle, Bega offloaded its 18.8% stake in the target to Saputo, making an initial profit of around $66 million.