BlueScope in Tax Office tussle

1 Jun 2012, 7:52 pm   -   Source: AAP

The Australian Tax Office could hit BlueScope Steel with a bill of between $51m and $140m if the company loses a dispute over a deal struck in 2007.

BlueScope Steel has found itself in a stoush with the Australian Tax Office (ATO) and could be hit with a bill of up to $140 million.

The ATO has told the steel maker it intends to issue it with amended assessments for the 2007 and 2008 tax years in relation to a sale and leaseback of equipment deal which allowed BlueScope to raise $270 million.

The new assessments relate to the gain BlueScope made on the sale of the equipment and the ATO's denial of the deduction for lease rentals paid to the new owner of the equipment.

BlueScope intends to dispute the ATO's new assessments.

If the company is unsuccessful, it faces a maximum liability of either $140 million or $51 million-$63 million.

The $140 million relates to the gain BlueScope made on the deal, while the other amount is linked to a deduction for lease rentals.

A BlueScope spokesman said the amounts were mutually exclusive, meaning that if the company lost the dispute with the ATO it would have to pay one amount or the other.

"BlueScope considers that these assessments involve mutually exclusive outcomes and that the real amount of tax in dispute relates to the second assessment," BlueScope said in a statement on Friday.

"BlueScope believes that its treatment of the transaction is correct and is supported by both the existing case law and the ATO's published ruling on sale and leaseback transactions."

BlueScope says it expects the resolution of the tax dispute will take some time.

It intends to apply to the ATO for part payment of the amended assessments pending determination of the dispute.

"Any amount paid will be fully refundable in the event that the matter is resolved in favour of BlueScope," the company said.

BlueScope's shares were two cents lower at 32.5 cents at 1335 AEST.

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