NT could miss out on Jemena tax windfall, environmental group says
The Australian Tax Office (ATO) has been asked to investigate gas pipeline owner Jemena over claims it has subverted national tax rules to avoid paying up to $500 billion over the next 35 years.
Jemena is the proponent of an $800 million pipeline project, known as the North East Gas Interconnector (NEGI), to deliver gas across the Northern Territory to eastern Australia.
Environmental Justice Australia (EJA) said a restructure between Jemena and its parent companies in Singapore and China may not comply with Australian tax rules.
It has asked the ATO to investigate.
EJA finance and climate lawyer, David Barnden, said the Territory could be missing out on significant tax revenue.
“It depends how much tax revenue goes into the Northern Territory, but if you look at major projects in the NT, the Palmerston North hospital for example, which could anywhere from 120 to 200 million dollars, there’s at least two hospitals right there,” Mr Barnden said.
He said Jemena restructured last year, allowing its offshore parent companies to lend it money at an unusually high interest rate.
“Because they’re so high, they’re at 10.25 per cent, we say that minimises their taxable income and over the life of this loan, which is 35 years,” Mr Barnden said.
“The tax office could lose half-a-billion dollars.”
Jemena has said it received approval from the ATO before going ahead with the restructure last year.
The ATO said it could not comment because of confidentiality laws.
EJA lists itself as a “not-for-profit public interest legal practice” which acts as “advisers and legal representatives to the environment movement, pursuing court cases to protect our shared environment”.
Jemena, which is jointly owned by the State Grid Corporation of China and Singapore Power, was announced as the preferred tenderer of the pipeline in November 2015.
In April, Jemena announced it would downsize the diameter of the pipeline, from the planned 14 inches, to 12, after a lack of NT gas producers committing to deliver their products via the NEGI.
The call for the ATO probe comes after a May 2016 report by an American pro-renewable think-tank which branded the NEGI project unviable.