Macquarie decides to take ATO to court over $318m

Q: What other large tax disputes involving banks are mentioned in the article?

The article notes a continuing dispute across the Tasman over structured finance transactions that carry a combined liability of about $1.4 billion for the big four retail banks.

MACQUARIE Group is disputing a bill for tax on about $318 million of income, joining the list of banks to tangle with the Australian Taxation Office.

By InvestSMART · 10 Feb 2010

By InvestSMART ·
10 Feb 2010

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MACQUARIE Group is disputing a bill for tax on about $318 million of income, joining the list of banks to tangle with the Australian Taxation Office.

Macquarie has been in dispute with the ATO since it was slapped with the bill in June.

The tax bill relates to the 2004 financial year. When the bank first objected to the bill, Taxation Commissioner Michael D'Ascenzo rejected the appeal.

Faced with having to pay the bill or go to court, the bank decided on Friday to take the matter to the Federal Court.

Macquarie argues that the $318 million of revenue should be tax free. The stoush comes as the ATO faces several actions from banks on the tax treatment of franking credits on hybrid shares.

The ATO is also reviewing several asymmetrical swap transactions undertaken by banks such as Commonwealth Bank and National Australia Bank.

Across the Tasman, a tax dispute continues over structured finance transactions that have a combined liability of about $1.4 billion for the big four retail banks.

In its filing, Macquarie says it is applying for the Tax Office ruling to be "set aside or varied".

The matter is due back in court on April 14.

In the 2004 financial year, Macquarie paid about $161 million in tax, representing an effective tax rate of 24.5 per cent.

Macquarie declined to comment, citing a policy of not discussing matters before a court.

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Frequently Asked Questions about this Article…

What is the Macquarie tax dispute with the ATO about?

Macquarie Group is disputing an Australian Taxation Office bill that says about $318 million of its income should be taxable. Macquarie argues that the $318 million of revenue should be tax free, and its initial objection was rejected by Taxation Commissioner Michael D'Ascenzo.

How much money is at stake in Macquarie's tax dispute and which financial year does it relate to?

The tax bill in dispute is about $318 million and relates to the 2004 financial year.

What legal steps has Macquarie taken against the ATO's tax assessment?

After the Taxation Commissioner rejected Macquarie's appeal, the bank decided to take the matter to the Federal Court. In its filing Macquarie is applying for the ATO ruling to be "set aside or varied."

When is Macquarie's ATO case next scheduled in court?

According to the article, the matter is due back in Federal Court on April 14.

How much tax did Macquarie pay in the 2004 financial year and what was its effective tax rate?

In the 2004 financial year Macquarie paid about $161 million in tax, representing an effective tax rate of 24.5%.

Are other banks facing similar ATO actions or tax reviews?

Yes. The ATO is facing several actions from banks over the tax treatment of franking credits on hybrid shares, and it is also reviewing asymmetrical swap transactions carried out by banks such as Commonwealth Bank and National Australia Bank.

What other large tax disputes involving banks are mentioned in the article?

The article notes a continuing dispute "across the Tasman" over structured finance transactions that carry a combined liability of about $1.4 billion for the big four retail banks.

Has Macquarie publicly commented on taking the ATO to court?

Macquarie declined to comment, citing a policy of not discussing matters before a court.