14th Jun 2007 11:14
Rio Tinto PLC14 June 2007 Rio Tinto and ATO settle franking credits dispute Rio Tinto and the Australian Taxation Office (ATO) have reached an agreement tosettle their outstanding dispute regarding tax assessments imposed on 1997franking credit transactions. Details of the dispute were disclosed to the Australian Securities Exchange on16 July 2003 and, most recently, in Rio Tinto's 2006 Annual report and financialstatements (Note 33).(1) As at the 2006 year end, the net amount in dispute, including additional tax,penalties and interest, stood at approximately A$515 million (US$407 million atthe year end exchange rate). As required by Australian tax law and practice, inAugust 2003 Rio Tinto made a part payment of A$164 million pending resolution ofthe ATO's claims. The agreed settlement, made without any concessions or admissions of liabilityby either Rio Tinto or the ATO, will involve the ATO repaying the amount of A$42million (US$35 million)* from Rio Tinto's part payment of A$164 million; the ATOretaining the balance of A$122 million (US$103 million)*, and Rio Tintocancelling net franking credits of A$48 million. The settlement will have noimpact on the expectation that Rio Tinto Limited will be in a position to payfully franked dividends for the reasonably foreseeable future. The settlement will result in a charge to earnings of approximately US$46million*, which will be reflected in Rio Tinto's 2007 half year results as anitem included in underlying earnings. * based on an exchange rate of A$1.00/US$0.8406 LONDON AUSTRALIA Media Relations Media RelationsChristina Mills Ian HeadOffice: +44 (0) 20 8080 1306 Office: +61 (0) 3 9283 3620Mobile: +44 (0) 7825 275 605 Mobile: +61 (0) 408 360 101 Nick CobbanOffice: +44 (0) 20 8080 1305Mobile: +44 (0) 7920 041 003 Investor Relations Investor RelationsNigel Jones Dave SkinnerOffice: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628Mobile: +44 (0) 7917 227 365 Mobile: +61 (0) 408 335 309 David Ovington Susie CreswellOffice: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639Mobile: +44 (0) 7920 010 978 Mobile: +61 (0) 418 933 792 Website: www.riotinto.comHigh resolution photographs available at: www.newscast.co.uk -------------------------- (1) Note 33, 2006 Annual report and financial statements: In 2002, the ATO issued assessments of approximately A$500 million (which amountincludes penalties and interest) in relation to certain transactions undertakenin 1997 to acquire franking credits. The transactions were conducted based onthe Group's considered view of the law prevailing at the time. Subsequently,the law was changed. The Group lodged objections to the assessments and on 26May 2003 the Australian Tax Office ('ATO') substantially disallowed thoseobjections. The Group subsequently lodged proceedings in the Federal Court todispute the assessments and the trial of these proceedings is scheduled for July2007. As required by Australian tax law and practice, part payment of the disputed taxassessments was required pending resolution of the dispute. A payment of A$164million was made, which will be subject to recovery with interest if, as isbelieved based on Counsels' opinion, the Group is successful in challenging theassessments. Consequently, the amount paid has been recorded as a receivable onthe balance sheet. As at the year end the amount of the disputed taxassessments, penalties and interest stood at approximately A$515 million (US$407million at the year end exchange rate) after tax relief on the general interestcharge component. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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