MLC settles tax dispute for $38.5 million
MLC Lifetime has reached an agreement to settle a dispute with the Australian Taxation Office (ATO) regarding the tax treatment of a reinsurance contract entered into by MLC Lifetime in the 1998 tax year and amended in the 2000 tax year.
The ATO concluded a review of the contract in August 2007 and issued an amended assessment to MLC Lifetime for approximately $54 million of primary tax, and interest and penalties of $16 million — an after-tax total of $70 million. The total amount in dispute was $84 million pre-tax.
In accordance with ATO practice on disputed assessments, the NAB Group paid 50 per cent of the amounts owing under the amended assessments in the 2009 tax year.
NAB Group lodged an objection disputing the ATO’s amended assessment, but the ATO disallowed the objection. NAB Group then lodged an appeal with the Federal Court.
Under a Deed of Settlement MLC Lifetime has now agreed to pay a pre-tax amount of $38.5 million to resolve the dispute in full, without the admission of liability, according to NAB.
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