Tax Disputes
- Tax
- Tax Disputes
Proactively resolving issues that may pose a tax risk
The Australian Tax Office (the ATO) is taking a more holistic approach to system health. Instead of focusing its efforts on time-consuming and costly audits, it now seeks to work with large market taxpayers to get better outcomes.
This aligns with what we're seeing in the market, where relatively few organisations have the appetite for protracted disputes and litigation. A majority of our clients are instead seeking support to proactively resolve issues that may pose a tax risk. Your key focus should be to minimise reputational and legal risks, and to limit disruption to your business, board and management.
How we can help
Allens has a long-standing reputation for having deep industry knowledge, technical excellence, outcomes-focused advocacy and credibility in front of tax authorities.
Judgment of when and how to resolve complex tax audits and disputes
Early, seemingly small decisions can disproportionately impact the ultimate outcome. Avoiding this requires multidisciplinary skills in evidence, technical tax knowledge, strategic dispute management and board/stakeholder management, and excellent judgment of when and how to resolve complex tax audits and disputes.
However you seek to resolve your matter with the ATO – whether through settlement and alternative dispute resolution, or by way of vigorously prosecuting your case – Allens' experts will act with the utmost integrity in the conduct of your dispute, yet always be conscious of maximising your position in these highly leveraged circumstances.
Preserving legal professional privilege
Not responding adequately to ATO requests and demands, handing over the wrong document, or not giving the right information, can have serious consequences for your prospects in a substantive tax dispute. Deciding what to do in such cases is often a matter of judgment and strategy, requiring Allens' care, experience and expertise to find the best way forward.
Allens' fully integrated tax and litigation teams ensure that legal professional privilege is preserved and your interests are protected by the law at all times.
Managing large-scale effort with leading litigation experience
Tax is often an issue of broader commercial sensitivity within an organisation, and we have the experience to guide you through the necessary internal and external stakeholder interactions while navigating the complex dispute process.
Our team specialises in significant international tax issues in relation to transfer pricing (particularly marketing hubs, intangibles and related-party financing), stapled structure reforms, hybrid mismatches, Part IVA (general anti-avoidance), deductibility of wages on construction of capital assets, thin capitalisation, consolidation and restructuring.
Experience
For decades, multinationals and Australia's highest-cap corporates (including from the resources, technology, manufacturing, financial and pharmaceutical sectors) have entrusted the Allens Tax and Dispute Resolution Groups with their most sensitive and strategic legal and tax disputes.
Much of our work is highly confidential and resolved without protracted litigation, and consequently does not reach the public domain.
Settlement of Rio Tinto's transfer pricing and financing disputes with the ATO
Advising on the settlement in July 2022 of six disputes with the ATO relating to transfer pricing arrangements with Singapore related parties and financing transactions involving UK related parties. The settlement involved a lump sum of close to A$1bn. The settlement also addressed the related MAP and arbitration aspects of the transfer pricing disputes.
Shell's High Court and Federal Court defence
Advising on proceedings in the Federal Court (2021) and the High Court (2022) regarding the $2.3 billion acquisition of Chevron's interest in the Browse project. Shell was successful before both the Federal Court and Full Federal Court. In September 2022, Allens successfully defended against an appeal to the High Court.
Settlement of multinational oil and gas company's Federal Court dispute with the ATO
Advising on the settlement in 2022 of our client's Federal Court dispute with the ATO, regarding whether assessable gains were made on the repayment of US-dollar denominated bonds issued by our client.
Settlement of complex device manufacturer's long-running ATO dispute
Advising on the settlement in late 2021 of our client's long-running dispute with the ATO about the correct taxation arising from its intellectual property licensing activities, and the creation of a high-value manufacturing and sales hub, in Singapore. This was the second-largest publicly disclosed tax settlement in Australia.
BHP's longstanding transfer pricing dispute with the ATO
Advised on BHP's agreement with the ATO to settle the transfer pricing dispute relating to its marketing operations in Singapore. The settlement fully resolves the longstanding dispute for all prior years, namely 2003 to 2018.
US-headquartered manufacturing group's transfer pricing dispute
Advising on the ATO's disputation of the arm's length nature of the transfer pricing arrangements – including those relating to the pricing of intragroup product purchases and the pricing of intragroup services – of its Australian distribution subsidiary.
Confidential taxpayer in the resources sector
Advising on a complex tax technical dispute relating to the assessability or otherwise of notional foreign exchange gains arising following the repayment of US-dollar denominated debt. Allens has recently commenced Federal Court proceedings on behalf of its client in this matter.
Confidential stapled company and trust investment vehicle
Advising on the Australian tax treatment of the stapled structure arrangement. The ATO is disputing the tax treatment, and invoking the general anti-avoidance provisions, thin capitalisation rules and related provisions.
This dispute is at the forefront of the ATO's attempt to apply the anti-avoidance laws to stapled structure groups.
Confidential multinational in the oil and gas sector
Advising on a dispute with the ATO on the tax treatment of expenses incurred relating to exploration arising from its purchase of a stake in a $30 billion exploration project.
This dispute will define the treatment of exploration expenditure when acquiring interests in oil and gas joint ventures.
Confidential ASX listed company
Acted for our client in relation to a complex dispute with the ATO involving the applicable functional currency rules and tax consolidation.
This cross-border matter is highly complex, and deals with the intersection of multiple Australian tax law and jurisprudence bodies.