TPG in $632.5m tax dispute over Myers exit

The Australian Taxation Office (ATO) has reportedly attempted to freeze the US private equity firm’s accounts in the country, claiming that it owes AUS$452m ($421.7m) in unpaid capital gains tax from the exit. The authority has also tried to impose a penalty fine of half the amount, according to The Australian newspaper, meaning TPG faces a total tax bill of $632.5m.

TPG replied that it had complied with Australian tax laws at all times and would continue to do so.

In 2006, the Australian government passed a bill designed to encourage foreign investment in Australia by narrowing the range of assets investors would need to pay capital gains tax for to real estate and the business assets of foreign residents’ permanent Australian establishments.

ATO reportedly alleged that TPG and fellow US investor Blum Capital employed companies in the Netherlands, Luxembourg and Netherlands Antilles to manage the investment. Although this would mean that the exit does not count as disposal of an Australian asset, the ATO is claiming that TPG must pay $632.5m in tax and fines.

The outcome of the dispute could have an effect on future activity in the country by private equity firms.

TPG and Blum exited their majority stake in Myers at the end of October. The AUS$2.4bn ($2.2bn) float was the largest IPO in Australia for two years.

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