COMPANIES in the tax havens of Luxembourg and the Cayman Islands have been hit with a tax bill of more than $738 million as the Australian Tax Office sharpens its focus on the private equity firm behind the 2009 float of the retailer Myer.
Documents filed in the Federal Court show the Tax Office has demanded more details about Texas Pacific Group’s Australian operations and who issued its local head, Ben Gray, with instructions relating to the offshore chain of ownership that controlled Myer from 2006 until 2009.
The Tax Office contends that after pocketing $1.5 billion of Myer float proceeds in November 2009, the Cayman Islands-based TPG Newbridge Myer Ltd and Luxembourg-based NB Queen SARL should have paid $452 million in income tax.
The Tax Office now has issued the companies with fresh assessments demanding the outstanding $452 million plus $226.12 million in penalties and $60.49 million interest.
Proceeds from the Myer float were channelled through a corporate structure that spanned four jurisdictions: from Australia the funds moved to NB Swanston BV in the Netherlands, then to its parent company, NB Queen in Luxembourg, which transferred the proceeds to TPG Newbridge in the Caymans.
A few days after the float, the Tax Office obtained a Victorian Supreme Court order freezing TPG’s bank account in Melbourne, but the account had already been drained.
Now the Tax Office has obtained fresh orders from Justice John Middleton in the Federal Court clearing the way for it to leave notices of demand at the South Yarra home of Mr Gray, the chief executive of TPG in Australia.
Lawyers for the Tax Office told the court that the ATO believes Mr Gray would bring demands for $738.85 million to the attention of the Cayman Islands and Luxembourg companies.
Mr Gray is believed to be overseas.
A statement issued on his behalf by the Sydney-based public relations consultant Sue Cato said: ”TPG strongly believes it has met all of its Australian tax obligations in connection with the investment in Myer department stores and its other investment activities in Australia and at all times has complied with Australian taxation laws and will continue to do so in the future.”
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The Myer float has been a dud for investors, who paid $4.10 a share in 2009. Amid some of the worst trading conditions in decades, the shares at $2.11 are trading just off record lows.
How Mercury reported it:
THE Australian taxman is following a $1.5 billion money trail that started with the float of the Australian retail empire Myer and ended in a Caribbean tax haven.
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Mr Gray, who was a principal player in the failed $11.1 billion takeover of Qantas, will also be served with legal documents seeking to wind up two overseas companies behind the Myer deal.
The son of former Tasmanian premier Robin Gray and a billion-dollar wheeler-dealer, Mr Gray is the chief executive of the Australian arm of the Texas Pacific Group (TPG) which was a major stakeholder in the private equity group which owned, then floated, Myer.
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Mr Gray has hired Sydney spin-doctor Sue Cato to handle inquiries from the media and a spokesman for her firm said TPG believed it had met all its taxation requirements over the Myer deal.
… but then added:
Apology to Ben Gray
THE MERCURY | August 29, 2011 05.30pm
On Thursday, August 25, a Mercury article headlined “ATO chases ex-Premier’s son” wrongly claimed the Australian Tax Office was seeking $735 million from Ben Gray as Managing Director of TPG Capital Australia.
The Mercury accepts that this is not true and apologises unreservedly to Mr Gray.
The Federal Court orders merely allow the ATO to serve Demand Notices on two offshore companies by leaving them with Mr Gray.
The ATO demands do not relate to Mr Gray personally and Mr Gray has confirmed that he is not a director of the offshore companies to which the notice is directed, as claimed in The Mercury.
Mr Gray says that he has answered all questions asked by the ATO in relation to the Myer IPO. Additionaly, TPG says it “strongly believes that it has met all of its Australian tax obligations in connection with the investment in Myer Department Stores and its other investment activities in Australia and at all times has complied with Australian taxation laws as will continue to do so in the future.”
First published: 2011-08-25 09:00 AM
