ConsMedia victory over Tax Office
CONSOLIDATED Media Holdings has won a fight against the Australian Taxation Office and will be able to book a $1 billion off-market share buyback deal with Crown casino as a tax-effective dividend, rather than pay a capital gains tax bill on the deal.
CONSOLIDATED Media Holdings has won a fight against the Australian Taxation Office and will be able to book a $1 billion off-market share buyback deal with Crown casino as a tax-effective dividend, rather than pay a capital gains tax bill on the deal.Late yesterday, three Federal Court judges upheld the appeal by Consolidated Media, which is more than 70 per cent owned by companies associated with James Packer and Kerry Stokes. Consolidated Media was formed when Publishing and Broadcasting Ltd was broken up into its media and gambling arms in 2007. It appealed against a Federal Court decision last year which backed the Tax Office's determination, which meant that the company was liable to pay tax on an assessable capital gain of $402.46 million.The tax dispute dates back to 2002 when Crown bought back 840 million ordinary shares from PBL, in the process returning $1 billion in funds which PBL had loaned. The ATO issued an assessment listing what it claimed was a capital gain for the 2002 year, and again for the 2005 tax year.However, Federal court judges Stone, Greenwood and Logan said while they agreed with Consolidated Media's depiction of the deal, so radically different was its appeal that it would not allow it to claim the costs of last year's fight against the tax office."The way in which CMH case was developed before us differed markedly from the way its case was developed before the primary judge," they said. "It was the latter statutory construction submission [of the legislation] which proved decisive, not any acceptance by us that the primary judge had in some way erred in failing to prefer the accounting evidence which CMH led."It is not the end of Consolidated Media Holding's fight against the tax office, with BusinessDay reporting in 2010 another round of appeals against ATO assessments issued in previous tax years.