Mystery of ION Ltd $13 million income tax refund continues despite massive report

 Tax debts, Tax liabilities, Taxation Issues  Comments Off on Mystery of ION Ltd $13 million income tax refund continues despite massive report
Oct 212010
 

The insolvency administrators’ 200 page report on ION Limited and subsidiaries (20/10/10) does not mention the once-anticipated income tax refund of $13 million.

So the mystery – described in my article “Insolvency administration income tax refund held up” – continues.

But then a tax dispute over $13 million could be regarded by some as trivial, compared with the momentous and complex issues addressed in the Deed Administrators’ report.  The report deals with ION Limited and its 17 subsidiary companies.  It was produced after the Deed Administrators had received from shareholders “numerous allegations of misconduct by ION”, and after the Deed Administrators obtained directions/permission regarding the report from the Federal Court of Australia.

The report’s main purpose is described in its introduction:

“In this Report we set out details of the work that has been done to date in relation to shareholder claims and the steps which remain to be taken to enable the Deed Administrators to determine these claims and to distribute funds to creditors. “

The present position in the administrations is summarised as follows:

“Since the initial appointment of the Administrators and the appointment of the Deed Administrators on 27 May 2005, the realisation of ION’s  businesses and assets has been completed. The review of proofs of debt lodged by suppliers of goods and services and by financiers has largely been completed with only a small number of complex claims still in dispute. The only matter of significance still to be concluded is the adjudication of proofs of debt lodged (or to be lodged) by shareholders.”

A taste of the report’s contents can be seen in the main headings in its Table of Contents, namely:

PART A – UPDATE AND WAY FORWARD

1. Introduction
2. Executive Summary
3. The Fund
4. Who can share in the Fund
5. Calling for and lodgement of Proofs of Debt or Claim
6. Estimated Return to Creditors
7. Updates to Creditors and Creditors’ Committee meetings
8. Purpose of Report
9. The Way Forward
 

PART B – OVERVIEW OF RESULTS OF INVESTIGATIONS

10. Overview of ION Group
11. Overview of Forensic Investigation Process
12. Factual Overview
13. ION’s disclosures regarding Financial Outlook
14. Consequences if tru position disclosed
15. Potentially Actionable Disclosures and Non-Disclosures

PART C – DETAILED RESULTS OF INVESTIGATIONS

16. Introduction
17. Financial Controls
18. Albury
19. Altona
20. Wingfield
21. North Plympton
22. Auckland
23. Kentucky
24. Energy Services
25. ION’s disclosures regarding Financial Outlook
Annexure 1. Pooled and Non-Pooled Entities.

For the full report go to http://www.ionlimited.com and click on the link to ION Report to Creditors 20 October 2010. For a short version click on the link to Creditor information.

Enjoy the read!

Any information on what happened to the expected income tax refund would be gratefully received.

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The comments and materials contained on this blog are for general information purposes only and are subject to the disclaimer. 

ION insolvency income tax refund is held up

 Priority Debts, Tax debts, Tax liabilities, Taxation Issues  Comments Off on ION insolvency income tax refund is held up
Oct 192010
 

It appears that the Deed Administrators of the ION group of companies have not yet received an anticipated income tax refund of $13 million.

Why the hold up? Is the refund no longer anticipated? If so, why not?

The possibility of an income tax refund was first mentioned by the Deed Administrators, Colin Nicol and Peter Anderson of McGrathNicol, in their report dated 23 October 2006:

 “The Administrators have completed and lodged the income tax return for the year ended 30 June 2004 and are working on finalising the subsequent returns. These are expected to result in a refund of income tax, however the final amount is not clear until it is established whether the ATO will have any claims which it is permitted to set off against the refund. “

 The next word on an income tax refund came in the Deed Administrators’  report dated 15 March 2007:

“With the completion of the income tax returns for the year ended 30 June 2005 (covering all pre-appointment activities), the Administrators expect a refund of income tax instalments paid by ION in respect of the 2004 and 2005 tax years, in addition to a possible refund of tax paid following an adjustment to the 2003 tax year return. The final amount is not clear, pending further discussions with the ATO.”

 Then in the Deed Administrators’  report dated 30 September 2009, they said: “(we) are anticipating a cash inflow of approximately $13 million in the coming months from the receipt of an income tax refund”.

Then in their December 2009 report they said: “(we) were anticipating a cash inflow during the last quarter from the ATO in relation to an income tax refund. The payment of this amount has been delayed by the ATO and the Deed Administrators now anticipate payment in early 2010.”

The quarterly reports that followed contained the same information. On 30 July 2010 the Deed Administrators said: “the payment of this amount continues to be postponed by the ATO, however the Deed Administrators anticipate payment in 2010.”

Subsequent reports were made on 24 September and 14 October 2010, but these make no reference to the income tax issue, probably because the reports address shareholders rather than creditors.

What is going on?

[To read these and other reports go to http://www.ionlimited.com/ and click on the link to “Creditor information”.]