July 30, 2021

ATO seeks tax, penalties from Myer float

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The Australian Tax Office wants private equity entities based in Luxembourg and the Cayman Islands to stump up $738 million for tax, penalties and interest after they reaped $1.5 billion from the 2009 float of the Myer retail chain.

While the Myer float has been a sobering experience for those who paid $4.10 a share in November 2009 – the stock was trading around $2.07 in afternoon trade – the ATO has been trying to claw back some of the proceeds for almost two years.

The ATO believes entities in the Cayman Islands and Luxembourg should have paid income tax on the Myer sale.

Documents released by the Federal Court today show the Tax Office wants TPG Newbridge Myer Ltd of the Cayman Islands and NB Queen SARL of Luxembourg to pay $452.24 million for tax arising from TPG’s $1.5 billion proceeds.

It has also levied penalties of $226.12 million, interest on those penalties of $20.16 million, and interest of $40.33 million against what it claims is the outstanding tax debt of $452 million.

The court this morning made orders allowing the ATO to serve notices of demand at the home of Ben Gray, the chief executive of the Australian division of the private equity firm, Texas Pacific Group.

Lawyers for the Tax Office told the court it believed Mr Gray was a person who would bring the notices to the attention of for TPG Newbridge Myer Ltd of the Cayman Islands and NB Queen SARL of Luxembourg. Mr Gray is believed to be overseas.

The Press Relations Manager, Owen Blicksilver, 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.”

TPG acquired the Myer department store chain in 2006, and three years later it sold its 81 per cent stake by way of a sharemarket float, realising $1.5 billion.

A few days after the float, the Tax Office made an urgent application to the Victorian Supreme Court seeking a freeze order over a NAB account where proceeds from the float were directed.

Although the Supreme Court in 2009 granted the injunction, there was little left in the bank account as the funds had been directed to NB Swanston BV in the Netherlands, then to its parent entity NB Queen SARL in Luxembourg which channelled the proceeds to TPG Newbridge Myer in the Cayman Islands.

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