Palmer forgave $100m loans to his companies to cut tax bill

Clive Palmer’s tax adviser says the billionaire was trying to minimise his tax when he forgave about $100 million in loans.

Clive Palmer. Picture: AAP

Clive Palmer’s tax adviser says the billionaire was trying to minimise his tax when he forgave about $100 million in loans from Queensland Nickel to his other companies.

Liquidators seeking about $100m for creditors claim the loans Queensland Nickel paid to Mineralogy were forgiven, meaning the company had a cash shortfall when nickel prices plummeted.

PwC accountant Graham ­Sorensen told the Queensland Nickel liquidation trial yesterday that the affairs of Mr Palmer were monitored by a dedicated team within the Australian Taxation Office that deals with high-net-worth individuals.

Mr Sorensen said it was Mr Palmer’s prerogative to do what he wanted with the money and that forgiving the loans, rather than paying the money to himself as dividends, was the best way to legally avoid income tax liabilities.

He said the tax office had never raised any concerns about Mr Palmer’s affairs.

Mr Sorensen said a provision in debt-forgiveness rules allowed for debts between companies with the same owner or controller to be forgiven and not needed for tax purposes.

Mr Sorensen said that if divid­ends had been paid, rather than the loans forgiven, it would have taken significantly more money for Mr Palmer to end up with the same amount of cash, because of income tax liabilities.

“Paying dividends would be quite silly because you’d effectively get the clawback of that benefit, whereas by giving loans and then deeds of forgiveness, there was no clawback of that benefit,” he said.

Barrister Jonathon Moore, acting on behalf of the general-purpose liquidators, asked Mr Sorensen if he believed the arrangem­ent was beneficial to Mr Palmer and not the joint-venture companies, QNI Resources and QNI Metals, that engaged Queensland Nickel to operate the Townsville refinery. “As the owner of the private company group, it would be quite sensible for a private company owner to do something like that, and well within the law,” Mr Sorensen said.

“I think it was a tax advantage to Mr Palmer, but it was a cash advantag­e, which is more important, to QNR and QNM.

“All of these debt forgivenesses were completed no later than 30 June 2015 and most of them were actually in the earlier years, 2012, 2013, when the business was ­making substantial profits.”

Mr Moore said it was Mr ­Palmer’s right to forgive the loans, unless­ creditors’ interests inter­vened, which the liquidators say occurred in 2015, before the refinery­ collapsed. “The financial statements of 30 June 2015 show liabilities, so there is evidence (there were unpaid creditors at that time),” Mr Moore said.

Queensland Nickel went into liquidation in January 2016, ­costing about 800 employees their jobs and more than $200m in debts.

Special-purpose liquidators, seeking to recoup $66m in taxpayer funds used to cover employee entitlements, joined their case with general-purpose liquidators representing other creditors.

Mr Palmer and the special-purpose liquidators agreed to ­settle this month for about $100m, leaving the general-purpose liquidators to contest the remaining debts.

Beginning on July 15, the Queensland Supreme Court trial in Brisbane was set to run for nine weeks but the court yesterday heard that some expert testimony would be delayed until October.

The replacement expert witness­ employed by Mr Palmer’s companies to testify that Queensland Nickel did not trade while insolvent­ will not give evidence until after a report is handed down late next month.

The delay in the new solvency report will also postpone the ­evidence of the liquidators’ own solvency expert, who claims Queensland Nickel traded while insolvent from October 2015 until the company went into voluntary administration.