Australia: Lion Nathan tax hit will not influence its operational profit
Lion Nathan has been hit with a tax bill of almost $30 million following an official audit of one of its subsidiaries, The Australian published on January 10.
However, Lion said the net cost of $27.6 million had been fully provided for in prior financial years and would have no impact on its operating profit outlook for 2007.
In fact, the company had overestimated the amount for which it might be liable to the tune of $9.5million, with the result that this "provision surplus" would be recorded as a one-off gain for the 2006-07 financial year.
Lion said this would help offset restructuring and investment costs of between $30 million and $40 million that it expected to incur this year.
The tax bill followed an audit by the Australian Tax Office of Lion subsidiary Lion Nathan Finance, relating to the deductibility of bad debts it racked up by funding other Lion subsidiaries.
The Tax Office has issued amended assessments for the 1999-2000 and 2001-02 financial years, amounting to $19.7 million in primary tax and $11.3 million in interest, the latter of which is tax-deductible.
A Lion spokesman said the company decided not to mount a legal challenge to the net bill of $27.6 million.
Lion rival Foster's is still disputing a $379 million tax claim from the Tax Office related to the funding of the Elders Finance Group between 1995 and 2004.
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