bbi vs. ato, page-14

Jonkey, thanks for the explanation, but I must admit I don't really understand it.

What worries me is this......

BBI is in dispute with the ATO for an amount of $102M. This is tax the ATO is saying must be paid now and is owed to them (not something that can be written off against future losses). To emphasise the immediacy of this liability in the ATOs eyes, they are charging interest at penalty rates that now amounts to about $45M.

BBI believes that their case is watertight, but have made a goodwill payment of about $50M to mitigate the amount of penalty interest should they lose the case. They are so sure of their case that they are classifying this payment as an asset on their books and expect it to be repaid in full, along with interest on it, and penalty interest paid to the ATO to date.

According to the article in The Australian on Friday, BBI have lost the case and will now need to pay the ATO about $150M ($100M more).

If correct, IMO, that extra $100M becomes a dept at corporate level ranking higher that other debts that BBI has, and so long as it remains unpaid will attract interest at penalty rates. The $50M asset will be expensed as a tax payment.