Macquarie cleared of tax avoidance over Minara sale
The Federal Court yesterday upheld an appeal by Macquarie Bank over the tax treatment of its capital gain, in March 2004, on its fleeting ownership of a minority stake in Minara Resources. Minara operates the Murrin Murrin nickel mine in Western Australia.In 2009 the ATO sought payment of a further A$95 million in tax in relation to what the Tax Office claimed was a gain of $318 million from the sale.Macquarie, in its tax return for 2004, recognised a gain of $41 million.The Tax Office argued that Macquarie engaged in tax avoidance in constructing the financing arrangements for the placement of a 36 per cent stake in Minara on behalf of private equity firm MatlinPatterson, which the year before had attempted to take control of the firm.The Tax Office's contention was that Macquarie devised the sale structure in order to obtain a tax benefit under commercial terms it worked out with its client.However, the judge, Richard Edmonds, wrote that: "To the contrary, I would conclude that [the] steps… either alone or together, were entered into or carried out by Mongoose for the dominant purpose of selling the Minara shares."