Crown Resorts to repay $37m in unpaid tax, 20 per cent of estimated $200m underpayment

Crown will repay $37m, plus interest, in unpaid taxes – less than 20 per cent of what one of its own executives estimated the total underpayment to be.

Crown Resorts says it owes the Victorian government $37m in unpaid taxes despite one of its own executives estimating the bill to be worth more than $200m. Picture: NCA NewsWire/David Crosling

Crown Resorts will pay back $37m in unpaid gambling taxes to the Victorian government, despite one of its own executives estimating the bill topped $200m.

In a statement released late on Tuesday, the James Packer-backed company said it had “resolved to make the payment”, which is less than 20 per cent of what Victoria’s Royal Commission into the group heard it owed in unpaid taxes dating back to 2012.

It comes as Crown’s licence for its flagship Melbourne casino is in the balance after counsel assisting the commission said last week that the company was not suitable to operate the sprawling Southbank complex. But Commissioner Ray Finkelstein will make the final recommendation when he releases his report in October.

Crown said it would pay the government a further $24m in “penalty interest”, taking its total repayment to $61m – less than a third of the amount the commission heard it potentially owed. Crown has calculated this payment itself.

But the Victorian gaming regulator will have the final say as to whether the amount is sufficient.

“Crown has resolved to make a payment to the Victorian Commission for Gambling and Liquor Regulation (VCGLR), representing an underpayment of casino tax by Crown Melbourne of approximately $37m over the period commencing in the 2012 financial year to date relating to the incorrect deduction of certain bonus rewards provided to patrons in connection with play on Crown Melbourne’s electronic gaming machines,” the company said.

“Under the terms of Crown’s regulatory agreements with the State of Victoria, Crown is required to pay penalty interest on any underpayment of casino tax. The penalty interest component up to and including today (July 27, 2021) is approximately $24m.

“Crown has notified the VCGLR of the outcome of this component of its ongoing review and has now paid the State approximately $61m, being the amount calculated by Crown as the underpayment of casino tax and applicable penalty interest as referred to above.”

Last month, the Victorian Royal Commission heard Crown Resorts attempted to conceal legal advice about the “possible underpayment” to the commission.

Following legal advice from firm MinterEllison, the company recruited Crown Melbourne gaming machines executive Mark Mackay in February to examine the potential tax liability arising from the casino’s practice of deducting the cost of loyalty program benefits from taxable poker machine revenue.

Mr Mackay told the commission on Monday that between 2014 and 2019 Crown may have underpaid gaming tax by at least $167.8m, and that “it could be over two hundred” when encompassing financial year 2020 and financial year 2021.

“Crown is continuing its review of other aspects of casino tax payments and will update the market once the review is complete,” the company said on Tuesday evening.

“Crown’s review includes a review of Matchplay, the loyalty promotion pursuant to which Crown Rewards Points are redeemed for credits for use in electronic gaming machines.

“Crown has been advised by the VCGLR that after the Victorian Royal Commission has delivered its final report, the VCGLR intends to finalise its consideration of Crown’s potential casino tax underpayments in order to form a view as to the quantum of Crown’s outstanding tax liability to the State. Crown will fully co-operate with the VCGLR’s review.”