James Hardie loses back tax battle
02 September 2010
Australian fibre cement products manufacturer James Hardie has lost its appeal against a AU$ 388 million (US$ 330 million) bill for back taxes against its subsidiary RCI. The company has 21 days to take a further appeal against this Federal Court of Australia decision to a Full Federal Court.
The dispute dates back to the tax year ending on 31 March 1999, in which James Hardie made a capital gain as a result of an internal restructuring that saw it move the ownership of its US subsidiaries offshore. In March 2006 it received an amended tax assessment from the Australian Taxation Office, which RCI objected to. The objection was disallowed by the ATO, at which point RCI took the case to a Federal Court. It is this appeal that has now been thrown out.
Although James Hardie has the option of a further appeal it says it is likely to record a charge in its accounts following the decision. However, it added in a statement that it will remain in compliance with its debt covenants should this charge be taken.