Australian tax authorities win right to pursue TPG over Myer

A Federal Court has permitted the ATO to serve Ben Gray, CEO of TPG Australia, with legal documents seeking a winding up of Luxembourg-based NB Queen SARL and its Cayman Islands parent, TPG Newbridge Myer. The two companies formed part of a complex structure by which A$1.5 billion ($1.6 billion) from the 2009 sale of TPG's 81% holding in Myer was transferred to offshore investors.

Shortly after the IPO, the ATO sought to recoup A$678 million in tax from TPG, shocking industry participants. Until this point, it had been assumed that profits from private equity transactions were a capital gain and beyond the reach of the authorities if the fund in question was domiciled in a jurisdiction that has a double tax treaty with Australia. The ATO appeared to have changed its stance, saying that the profits were business income and therefore subject to local tax.

The court heard on Tuesday that the ATO's claim has now grown to A$739 million, including interest and penalties.

The ATO lodged with the court Gray's answers to a series of questions about what he described as TPG Australia's role as an "investment banking adviser" to Newbridge Capital and TPG. Gray said that he had no recollection of being involved in the creation of any relevant offshore entities, adding that TPG Australia had not provided advice on tax matters. He revealed that TPG Australia had received A$38.7m in fees from TPG and Newbridge since 2004.

A TPG spokesperson said that the company strongly believed it had met all of its Australian tax obligations, both on the Myer sale and through its other investments.

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• Topics
• Australasia
• Regulation
• Exits
• TPG Capital