Rio Tinto plans to argue a $406.5 million tax bill from the Australian Taxation Office following its denial of reductions in interest from money borrowed in 2015.
The deductions related to borrowed funds that were used to pay an intragroup dividend and were repaid by Rio Tinto in 2018.
The ATO tax bill issued to Rio Tinto comprises $359.4 million of primary tax and $47.1 million of interest.
The mining giant is planning to dispute the assessments and flagged that the company had paid more than $8.4 billion of Australian income tax during the period.
“Borrowing to fund the payment of a dividend is a normal commercial practice,” Rio Tinto stated.
“Rio Tinto is confident of its position and will dispute the assessments.
“In accordance with the usual practice Rio Tinto will pay 50 per cent of the primary tax up-front as part of the objections process.”
Rio Tinto is also involved in an ongoing dispute with the Australian and Singaporean tax authorities.
The ATO claimed that Rio Tinto did not charge a suitable price for the aluminium sold to the miner’s Singapore marketing hub.
This resulted in an $86.1 million bill from the ATO, in which Rio plans to also dispute.
Rio Tinto stated last year that Australian and Singaporean tax authorities would resolve the matter through negotiation under the Australia-Singapore double tax treaty.
The mining major was also hit with a $447 million tax bill from the ATO in 2017 due to the transfer pricing of Australian iron ore, with the dispute still under way.