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  • Alumina (AWC) investee, Alcoa of Australia (AoA), plans to dispute a $921 million tax bill from the Australian Taxation Office (ATO)
  • AoA is part of a joint-venture, with 40 per cent owned by Alumia and 60 per cent held by the American Alcoa Corporation
  • The ATO claims it is owed significant back pay from Alcoa after an extensive 20-year investigation allegedly indicates AoA underpriced the value of aluminium sales
  • Further undefined penalties are expected, which could push the total bill to $1 billion
  • AoA will soon fork out $107 million to cover half of the primary income tax penalty while it continues to dispute the total bill
  • Alumina shares rose 0.94 per cent on the market today, trading for $1.61 each

Alumina (AWC) investee, Alcoa of Australia, (AoA) plans to dispute a $921 million tax bill from the Australian Taxation Office (ATO).

AoA is part of a joint-venture, with 40 per cent owned by Alumia and 60 per cent held by the American Alcoa Corporation.

According to a media release from Alumina on Wednesday, the ATO alleges it is owed significant back pay from AoA after an extensive 20-year investigation.

The office claims Alcoa of Australia underpriced the value of aluminium sales, leading to the claimed back pay.

The total bill comes to $214 million in back taxes, alongside accumulated interest of $707 million — officially served to the industrial giant’s local

A media release published to the Australian Securities Exchange from AWC was authorised by Chief Executive Mike Ferraro on Wednesday.

“AoA will defend its position in respect of the ATO’s notices (and the associated interest claim and any penalty assessed), and pursue all available dispute resolution methods, up to and including the filing of court proceedings,” it read.

“Alumina also notes that, over the last decade, AoA has paid approximately A$3.1 billion in income taxes in Australia, with an effective income tax rate of approximately 30 per cent over this period,” the announcement explained.

An undefined further amount of administrative penalties are also planned by the ATO, which could push the total bill closer to, or over, A$1 billion.

AoA expects a formal and finalised penalty from the ATO after August 1.

Fortunately for the company, dispute standards for the ATO allows AoA to slow the payment schedule if unchanged.

AoA plans to pay $107 million (half of the primary income tax penalty) in cash during the third quarter of this year.

“AoA’s obligation to make any further payment of this primary tax amount, or payment of any penalty or interest amount advised by the ATO, will be determined through the objection and court processes available to AoA,” Wednesday’s release also said.

“If AoA is ultimately fully successful, the 50 per cent part-payment to the ATO would be refunded,” it continued. “Further interest on the unpaid amounts will continue to accrue during the dispute”.

Alumina shares rose 0.94 per cent on the market today, trading for $1.61 each at market close.

AWC by the numbers
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