Thursday, 29 September 2005 10:00

Keycorp in $4.4m tax loss stoush with ATO

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Electronic transactions provider Keycorp Limited (ASX: KYC) is in dispute with the ATO over the transferrence of tax losses in relation to the sale of one of its businesses to Telstra. An ATO ruling could cost Keycorp up to $4.4 million.

During the course of due diligence into the Transaction Network Solutions (TNS) business prior to the sale to Telstra, uncertainties were identified in relation to the tax law applicable to tax loss transfers completed between Keycorp group companies in 2001 and 2002. Keycorp requested a private ruling from the ATO.

The ATO has notified Keycorp that it does not agree with its position, so under advice fom its accountant Ernst & Young, Keycorp will appeal the ATO ruling, claiming that the ATO has not fully considered the key issues contained in its request for private ruling.

Under current tax legislation, if a business with revenues of more than $100 million changes ownership, tax losses can not be tranferred. Under previous legislation, businesses that could demonstrate that they were carrying on essentially the same business under different owners were exempt.

If Keycorp fails in its bid to have the ATO reconsider its position, the company could incur an additional income tax liability of up to $4.4 million.


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Stan Beer

Stan Beer assists with Digital Advertising installation and monitoring of advert performance. With 35 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications. Any previous news story submissions should be director to editor@itwire.com and advertising enquires to andrew.matler@itwire.com

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