Crown Resorts to Fight Against Sudden ATO Taxes
The ATO (Australian Tax Office) has surprised James Packer and the Crown Resorts group, and caught them off guard by sending an amended bill of taxes that hit the casino with almost 250 million dollars in back taxes. This amount is for the time period between the 3rd of June in 2009 to the same date in 2014. That is not all what the ATO did, as it also sent another bill that amounted up to 112 million dollars, but this one is because of the fines that the casino has to pay. All of this brought the total amount requested by the ATO from Crown Resorts to an astonishing 362 million dollars.
The back taxes mentioned above and the fines are related to the period when James Packer decided to take an interest in the United States market and venture to the US in 2007 as he tried to purchase the CCR (Cannery Casino Resorts) after he paid a total of 1.75 billion dollars to acquire the full Cannery Casino Resorts portfolio. This included 4 casino resorts that are located in Pennsylvania and Nevada. James Packer, who is the owner of 53% of the Crown Resorts, had high aims on establishing the brand in the USA, but it seems that he has picked the worst time to do so, as the global economic crisis shook the entire casino industry which forced Crown Resorts and James Packer to write down millions and billions of dollars.
The Australian Tax Office has waited almost 7 years to highlight these fines and takes, which came as a rude awakening for not just James Packer and Crown Resorts, but for the investors in the company as well. In addition, the 362 million couldn’t have come in a worse timing, as the casino has heavily invested in setting up new projects and casinos such as Alon Casino in Las Vegas and the Barangaroo Casino in Sydney Australia.
Crown Resorts has responded to these taxes and fines by stating that they are going to fight the decision and that they will not pay that fine. They also added in a statement through a representative of Crown Resorts that they are going to do everything possible in order to overturn the Australian Tax Office decision, and this includes resolving the issue in a court of law. The statement also added that Crown Resorts pays all of its taxes and that in 2015; the company paid well over 640 million in taxes to different levels of the government. This amount is almost 2/3 of the Crown Resorts' normalized profit prior to taxes.
Putting the financial commitments that Crown Resorts has taken over the upcoming 5 years, this unexpected fine would certainly pose a huge negative for the shareholders of the company. If these fines and taxes are broken down and divided per share, each share would be reduced by almost fifty cents.