Friday, September 01, 2023

Neil and Ed Deep Dive: Why the PwC tax scandal spells the end of the Big Four's golden run

Listening to La TRAVIATA and AFR in Florence

This week in The Fin podcast, senior writer Neil Chenoweth, professional services editor Edmund Tadros and Rear Window columnist Joe Aston on the tax leaks scandal nine months on, why it can never be business as usual for the big four consulting firms and whether PwC’s Australian business can survive.

Further reading:

Why the PwC tax scandal spells the end of the Big Four's golden run

Hilton challenges ATO's multinational tax assessment

An ATO assessment altering Hilton's income tax and deducting certain tax benefits has been challenged by the multinational hotel giant in court.

Hilton International Australia's 2015 tax returns were assessed and altered by the Australian Taxation Office in a notice issued to the hospitality group in December 2020.

The ATO claims the corporation should have included certain amounts of assessable income for one of its multinational consolidated group of companies.

A further net capital gain used by the group as a tax benefit was also deducted by the tax office which claimed Hilton had structured its companies as part of a "scheme" to avoid paying tax locally in Australia.

This assessment has now been appealed by Hilton in the Federal Court.

The exact amounts sought by the ATO are not known as they have been redacted in court documents seen by AAP.

Hilton has claimed the commissioner of taxation "incorrectly" increased its assessable income and capital gains.

The firm has also denied the structure of its group was any sort of tax avoidance scheme.

"(Australian tax law) did not apply to authorise the (ATO) to make a determination ... to cancel a purported tax benefit, being the non-inclusion of a purported net capital gain," Hilton wrote in its notice of appeal.

The court has been asked to set aside the tax office's decision and send the matter back to the commissioner for re-assessment.

A Hilton spokeswoman said the firm complied with local taxation laws.

"Hilton Australia is fully committed to adhering to all relevant laws and regulations in the jurisdictions that we operate in," she said.

"We have no comment on this ongoing matter with the Australian Tax Office."

A spokeswoman from the tax office also declined to provide any details of the dispute.

"The ATO cannot comment on matters currently before the court and for reasons of confidentiality does not comment on the affairs of individual taxpayers," she said.

The matter will next come before Justice Wendy Abraham on April 24 next year after Hilton and the ATO have filed the evidence they wish to rely on at a future hearing.