Macquarie wins tax case

MACQUARIE BANK, a division of the country's biggest investment bank, has won a $95 million dispute with the Australian Taxation Office over the 2004 sale of a stake in the nickel producer Minara Resources.

By InvestSMART · 27 Sep 2011

By InvestSMART ·
27 Sep 2011

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In the Federal Court in Sydney yesterday, Justice Richard Edmonds dismissed the Tax Office's claim that Macquarie used a tax avoidance scheme when it engineered the sale of 165.5 million shares held by MatlinPatterson Global Opportunities Partners at $2.90 each.

The Macquarie Group-owned bank claimed at a hearing in June that the government was attempting to assess taxes against it on profit made by MatlinPatterson.

MatlinPatterson, which was Minara's second-biggest shareholder, bought a 35.9 per cent stake in the mining company in 2003 as part of an attempt to take it over, according to court documents.

Macquarie arranged a "bought deal" in February 2004 for the MatlinPatterson shares, purchasing them for $2.65 each and selling them on to institutions for $2.90, earning $41.4 million on which the bank paid $12 million in taxes, according to the court papers.

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Frequently Asked Questions about this Article…

What was the Macquarie tax case about?

The Macquarie tax case was a Federal Court dispute between Macquarie Bank (part of Macquarie Group) and the Australian Taxation Office over the 2004 sale of a stake in nickel producer Minara Resources. The ATO alleged Macquarie used a tax avoidance scheme in that transaction; the court dismissed the ATO's claim.

Which companies were involved in the Macquarie-Australian Taxation Office dispute?

The dispute involved Macquarie Bank (Macquarie Group), the Australian Taxation Office (ATO), Minara Resources (the nickel producer whose shares were sold) and MatlinPatterson Global Opportunities Partners (the shareholder whose shares were sold).

What did the Federal Court decide in the Macquarie tax dispute?

In the Federal Court in Sydney, Justice Richard Edmonds dismissed the ATO's claim that Macquarie used a tax avoidance scheme in engineering the 2004 sale of Minara Resources shares, effectively settling the reported $95 million dispute in Macquarie's favour.

How many Minara Resources shares were sold and at what price in the 2004 transaction?

Macquarie engineered the sale of 165.5 million Minara Resources shares, which were sold on to institutions at $2.90 per share after Macquarie purchased them from MatlinPatterson.

How much did Macquarie earn from the Minara transaction and how much tax did it pay?

According to court papers, Macquarie earned $41.4 million from the deal and paid $12 million in taxes on that amount.

What role did MatlinPatterson play in the Minara Resources stake sale?

MatlinPatterson Global Opportunities Partners was Minara's second-biggest shareholder, having bought a 35.9% stake in 2003 during an attempted takeover. In February 2004 Macquarie purchased MatlinPatterson's shares as part of the arranged deal and then sold them to institutions.

What does the article mean when it says Macquarie arranged a 'bought deal'?

In this article, the 'bought deal' refers to Macquarie arranging the February 2004 transaction in which it bought MatlinPatterson's Minara shares for $2.65 each and then sold them on to institutional buyers for $2.90 each.

When and where was the Macquarie tax case heard?

The case was heard in the Federal Court in Sydney and reported in connection with the 2004 sale of Minara Resources shares; the court's decision was handed down by Justice Richard Edmonds.