Explosives maker Orica was in the Federal Court last week, disputing an Australian Tax Office’s amended tax assessment totalling over $50 million.
The Australian Financial Review reports that the ATO’s $50.6 million bill was for the years 2004 – 2006, and concerned circular financing arrangements.
"Orica created a set of circumstances to get a tax deduction in Australia," ATO lawyer Greg Davies told the court, according to The AFR.
The arrangement included Orica Finance borrowing $US 265 million from Orica’s US subsidiary, with it being paid interest while assuming the US business’s losses.
Orica’s lawyer said that an alternative was to wait for the US subsidiary's fortunes to turn around while doing nothing, and maintained the company had done nothing wrong.
The matter is reserved for judgement.