27th
The Value Of Simplicity
Private equity firm TPG got a heavy tax bill from Australian government.
MELBOURNE, Nov 25 (Reuters) - Australia’s tax office has hit U.S. private equity group TPG [TPG.UL] with a $628 million bill for tax and penalties, in a dispute that threatens to deter further foreign investment in the country.
TPG last month sold its stake in top Australian department store chain Myer (MYR.AX) in an initial public offering, netting a profit of A$1.58 billion ($1.46 billion). The dispute centres on how to tax those gains.
The Australian Taxation Office’s claim hinges on two issues: whether private equity asset sales should be taxed as a capital gain or as business income, which would mean a higher rate, and whether TPG’s structure using tax havens was designed to avoid tax.
It is shocking how much money is spent in the private equity industry on tax advisors and consultants to structure deals in supposedly safe tax-friendly countries, just to discover at the end that it is useless and damaging.
The value of simplicity is vastly underestimated.
