This story was originally published in The West Australian on 25 May 2018 with the headline "Chevron pays $866m to ATO." © Peter Milne.
Chevron has paid the Australian Taxation Office $US654 million ($866 million) under a partial settlement of its dispute with the tax office over intercompany loans and slashed the interest rate it charges its Australian subsidiary.
The energy giant lost an appeal in the Federal Court last year over a $2.5 billion loan from a subsidiary in the US to Chevron Australia that charged an interest rate of about 9 per cent. The court determined the interest paid by the Australian company was higher than it would have been under an arms-length deal between independent parties.
Chevron made a settlement with the ATO in August for the loans considered in the case over a $340 million tax bill, as well as tax for other, similar loans.
WestBusiness understands the $US654 million bill is not the full payment for the settlement.
The operator of the Gorgon and Wheatstone LNG projects has now consolidated its borrowings into a single 20-year $39.5 billion loan. The much lower variable interest rate, currently 2.78 per cent, would still produce an annual interest bill of about $1.1 billion. The details were revealed in Chevron’s 2017 annual report, which became publicly available yesterday.
Chevron’s revenue in Australia last year soared from $US1.65 billion in 2016 to $US4.01 billion, driven by Gorgon’s first two LNG trains increasing production and the third train coming online. A company spokesman said that with production underway the company was earning revenue but not generating a taxable profit.
Depreciation of $US1.77 billion on its massive construction spend, finance costs of $US981 million and a foreign exchange loss of $US2.74 billion saw the US major lose $US2.36 billion in Australia last year.
Chevron paid $US306 million in income tax last year from the $US654 million due, less a withholding tax refund of $US348 million. It last paid income tax in 2012 and excluding any further settlement payments may not do so again for some years.
Pitcher Partners managing director Leon Mok said Chevron’s significant carried forward tax losses of about $US5.86 billion and the interest deductions from the $39.5 billion loan would reduce any future tax payable.
Chevron also has a $US731 million petroleum resource rent tax credit that will delay the start of payments for the gas its LNG plants consume.
The spokesman said the company had paid $5.3 billion in Federal and State taxes and royalties in Australia since 2009.