Tabcorp Reaches Settlement with Australian Taxation Office
LISTEN TO THIS ARTICLE:Tabcorp, the Australian gambling operator, has received a refund of $53.4 million after its dispute with the Australian Taxation Office (ATO) was resolved.
The dispute was in relation to the income tax treatment of payments for different licenses and authorizations. Tabcorp says that the disputed tax liabilities and interest were fully paid. The refund amounts to 20% of those disputed amounts.
As a result of the settlement with the ATO, all proceedings initiated by taxpayers will be dropped. Correspondingly, Tabcorp has agreed to remit about $37m to The Lottery Corporation Limited (TLC) in accordance with the businesses’ Separation Deed.
Related: Tabcorp Fined AU$1 Million for Obstructing Outage Investigation
Dispute Dates Back to March 2022
The origins of the dispute lie in the announcement Tabcorp made in March 2022 detailing the separation of TLC lottery operations from wagering, media, and gaming services.
This demerger was finalized in June, culminating in a process that was initiated in July 2021. Following this settlement, Tabcorp anticipates a post-tax benefit of roughly $45.0m. This will be documented in the financial statements for the year ending 30 June 2024 and will be highlighted as a significant entry.
Another clause in the settlement dictates Tabcorp’s approach towards future license fee renewals. With some limitations in place, the company should regard these fees as capital expenditures. However, Tabcorp anticipates no significant impact on upcoming financial results due to this.
How TLC Was Formed
Forming TLC wasn’t a straightforward endeavor. Initial plans to separate the lottery and keno sectors, post a strategic analysis, presented multiple alternatives, encompassing a potential sale of Tabcorp’s wagering and media segment.
Various unsolicited offers emerged for this division, including those from entities like Entain, Betmakers, and Apollo Global. However, Tabcorp rejected them, asserting they did not mirror the division’s actual worth.
Rather than selling, Tabcorp decided to spin off its lottery operations. This move eventually led to the formation of two distinct entities. One took on the name “The Lottery Corporation,” primarily encompassing the erstwhile Tatts operations, however, devoid of gaming services. The other, named “New Tabcorp,” consolidated the wagering, media, and gaming segments.
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