Deal involves no admission of liability, after allegations the company tried to show lower profits in Australia
Aged care provider and health insurer Bupa has paid the Australian tax office $157m after settling a long-running dispute.
Bupa Australia said the settlement brought an end to a more than decade-long dispute with the ATO over a “number of different matters”, included transfer pricing issues with acquisitions in Australia in 2007 and 2008.
“We are pleased to reach this in-principle agreement,” Bupa said in a statement. “Importantly, the settlement will provide clarity for Bupa Australia and the ATO in relation to how taxes will be assessed in the future.”
The Centre for International Corporate Tax Accountability and Research, which campaigns on tax avoidance and minimisation, welcomed the settlement as a “positive first step”. But principal analyst Jason Ward said Bupa wasn’t the only major for-profit aged care provider that required scrutiny.
“There is a complete lack of accountability for companies that are getting hundreds of millions of dollars in public funds – other taxpayers’ money – to care for Australia’s elderly,” Ward said. “As recommended by the recent Senate Inquiry, this is an issue that must be addressed by the current royal commission into aged care.”
Bupa’s tax affairs came under scrutiny last year in a report by the Tax Justice Network. The report alleged that Bupa frequently used related party loans and debts from a corporate restructure, among other things, to reduce its profits in Australia.
According to the report, Bupa posted a total income of $7.5bn in Australia in 2015-16, but paid just $105m in tax on a taxable income of $352m. Its aged care business in Australia made more than $663m, about 70% of which was from government funding.
At the time of the report’s release, Bupa denied it had breached any tax laws.
“Bupa paid A$114m in income tax on taxable income of $391m for the year ended 31 December 2016,” a Bupa spokesman said at the time, referring to the calendar year rather than the financial year. “While we have some international related party debt to fund the expansion of our businesses, we consider our associated tax positions are in line with Australian tax law and practices.”
Bupa’s settlement with the ATO this week involved no admission of liability.
Bupa is one of the biggest owners of for-profit aged care residences in Australia, and also offers health insurance, dental and optical services.