Newmont in Federal Court to dispute tax claim dating back to 2011 restructure
Should a company restructuring attract capital gains tax? Newmont and the ATO are fighting the toss in the Federal Court.
Gold giant Newmont is fighting a $132.6m dispute with the Australian Taxation Office dating back more than 13 years, arguing an internal company restructure should not have triggered capital gains taxes.
The company and the ATO appeared in the Federal Court in Perth on Monday to argue the case, after mediation last year failed to find an answer to the long-running dispute.
The Australian understands the dispute relates to Newmont’s move in 2011 to consolidate ownership of its Australian mines under the banner of its main Australian subsidiary, Newmont Australia.
At the time the company owned the giant Boddington mine – only operating for two years at the time, along with Jundee and a half-share in the Kalgoorlie Super Pit, and the large Tanami mine in the Northern Territory.
As part of the restructuring two of Newmont’s North American subsidiaries – Newmont Canada FN Holdings and US-based Newmont Capital – sold their holdings in the Australian company back into Newmont Australia. The two stakes were worth about 30 per cent of the Australian company.
The dispute kicked off in 2015, when the ATO looked back at the transaction and decided capital gains tax should be levied on the transfer.
Newmont argues that the transfer is simply an internal restructure, rather than a share sale, and should not attract capital gain taxes.
The US gold major took the matter to court in 2017 and the matter has lingered in the federal court system ever since. In 2017 court documents show the ATO have assessed Newmont’s total liability at $120.7m – including $97m in primary tax and additional penalties and interest.
Newmont made a $US24m part-payment of the assessment in 2017, according to the company’s last annual report, which assessed the total liability at $US85m ($132.6m).
Newmont said in its March annual report it planned to “vigorously” contest the ATO assessment.
A spokeswoman for the gold giant declined to make detailed comment on Monday as the matter was before the court.
“Newmont is currently an applicant in a matter before the Federal Court relating to the income taxation consequences of a 2011 internal restructure,” she said.
“The ATO believes that this internal restructure should have incurred capital gains tax and Newmont has a different view.”
Newmont’s 2011 restructure came as Boddington was ramping up to peak production, producing 740,000 ounces of gold and 69 million pounds of copper during the year. Boddington poured its first gold in 2009, shortly after Newmont paid $US982m to buy out AngloGold’s 33 per cent stake in the project.
Boddington remains Australia’s biggest gold mine, producing 791,000 ounces of gold in the 2023 financial year according to gold consultancy Surbiton Associates.
The Newmont restructure also paved the way for the 2014 sale of the Jundee mine in WA to Northern Star Resources.
Newmont’s presence in Australia is now far larger than in 2011. The company’s $26bn acquisition of Newcrest Mining in 2023 now make the US major the owner of Australia’s three biggest gold mines – Boddington, Cadia and Tanami, which have combined production of about 1.8 million ounces a year.
The matter returns to court on Tuesday.
Newmont’s Australian listed shares last traded at $74.69.
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