AGRIBUSINESS Elders Ltd expects a substantial injection of cash if it emerges the winner in a long-running tax dispute with the ATO.
The Commissioner of Taxation today failed in its latest bid to overturn a court decision in favour of Futuris Corporation, now known as Elders Ltd.
The full court of the Federal Court of Australia dismissed an appeal by the tax commissioner against an earlier decision by a single judge in August 2010.
The tax commissioner has 28 days to decide whether to appeal to the High Court.
The case revolves around an amended tax assessment issued by the ATO in 2004 in respect of the sale of Futuris's building products division in October 1997.
The amended assessment added $82.95 million to Futuris's assessable income, to which the company objected.
The single judge of the Federal Court allowed Futuris's objection and excluded the $82.95 million from taxable income, prompting an appeal by the tax commissioner to the full court.
Elders said in a statement today that the effect of the full court's decision was that it upheld the objections of the company against the amended tax assessments.
"Should the ATO not appeal or special leave is not granted by the High Court, Elders anticipates receipt of cash of $38.5 million by way of refund of pre-paid tax, penalties and interest of $27.6 million and interest on that pre-payment currently estimated to be $10.9 million," Elders said.
Elders said it would receive a profit and loss benefit of $65 million after tax, through the reversal of provisions and reimbursement of interest.
If the ATO applies for special leave to appeal to the High Court, Elders said it would continue its current policy of making adequate provision for a contingent liability while defending its position.
Elders shares had been placed in a trading halt before the announcement of the Federal Court's decision.
After the halt was lifted, Elders shares surged and closed three cents, or 14.29 per cent, higher at 24 cents.