ATO dispute jeopardises Tianqi and IGO’s tax credit windfall

The West Australian11-23

Tianqi Lithium faces mounting pressure to settle a potentially “significant” Australian tax dispute before its joint venture can reach into a $17.6 billion pot of tax credits.The Australian Taxation ...

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The TLEA corporate vehicle also expects to be shielded.“Whilst discussions are on-going and the ATO has yet to reach a position on the transaction, TLEA remains confident that no adjustments will be required to its lodged tax returns,” a spokeswoman for TLEA told The West Australian.But Chengdu-based Tianqi is bracing for the worst, according to documents lodged this financial year by one of its Australian subsidiaries.Camera IconMinerals Processing Plant, Lithium. IGO-Tianqi lithium hydroxide refinery in Kwinana Credit: Robert Garvey“The ATO continues to focus on arrangements whereby a restructure by (a) multiple entry consolidated group enables a tax free exit from Australian investments,” it stated.“Tianqi is currently engaging with the ATO in respect of the IGO Transaction to obtain certainty of the tax outcomes. The outcome and timing are uncertain at this stage.“If the ATO sought to apply Part IVA Income Tax Assessment Act 1936 to the IGO transaction and the internal restructure, based on what is considered the counterfactual most likely to be put forward by the ATO, this could give rise to a primary tax liability and penalty, which may have a significant impact on the financial results.”The protracted tax battle comes while Tianqi is in line to reap a sizeable chunk of the Federal Government’s $17.6 billion production tax credit package for downstream processors of critical minerals.TLEA’s Kwinana refinery stands to be eligible for the tax credits once they kick in from July 1, 2027.Shadow Resources Minister Susan McDonald said Tianqi should have to settle with the ATO before TLEA can receive the tax breaks.“Given the very long lead time for the introduction of the production tax credit, it is entirely reasonable that this company should have resolved the dispute with the ATO before they apply to benefit from the scheme,” she told The West.A spokesman for Treasurer Jim Chalmers declined to comment on the Tianqi matter.But The West understands Dr Chalmers is currently creating specific rules in regards to accessing the production tax credits.It is understood recipients will have to demonstrate transparency and compliance in their management of tax affairs.Tianqi’s tax woes are compounded by escalating tensions with its TLEA joint venture partner.IGO boss Ivan Vella last week sensationally declared the Kwinana refinery a dud, even if the processing plant reaches nameplate capacity and lithium prices keep improving.IGO has written down the value of its 49 per cent stake to zero and wants the refinery, which cost $1.2 billion to build, mothballed.Tianqi, however, wants to keep the refinery running because it feeds operations further downstream.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"policyRegulatory","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.9","shortVersion":"4.35.9","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2585398487","isCrawlerRequest":true}