Australian racing and wagering giant Tabcorp Holdings Limited announced Monday that it has resolved a dispute with the Australian Taxation Office (ATO) that will see it recognize a benefit of approximately AU$45 million (US$28.7 million) after tax in its financial statements for the year ending 30 June 2024.
The dispute related to the income tax treatment of payments for various licences and authorities, with Tabcorp stating it has now paid in full the disputed amount of tax liabilities and interest to the tax office.
As part of the settlement, the ATO will refund Tabcorp approximately AU$83 million (US$53.2 million) – representing 20% of the disputed tax liabilities and interest – and in return Tabcorp will drop all proceedings in relation to the disputed amount.
The company will, however, be required to pay approximately AU$37 million (US$23.7 million) to The Lottery Corporation Limited (TLC) under the terms of its Separation Deed dated 25 March 2022. Tabcorp demerged its lotteries and keno business last year with TLC subsequently listing on the Australian Securities Exchange as a separate entity.
As a result, Tabcorp will recognise a AU$45 million benefit, which will be treated as a significant item.
According to Tabcorp, the settlement also included an agreement in relation to how it will treat future licence fees payable in respect of renewals of relevant existing licences.
“Subject to agreed limitations, Tabcorp must treat the fees as being of a capital nature,” it said. “Tabcorp does not believe this will have any material effect on future results.”