Lendlease Australia responds: to AFR article

On Monday the Australian Financial Review published a story, Lendlease reveals liability risk from PwC-advised $260m tax scheme, that included elements of speculation. 

The story notes the inclusion of the ongoing Australian Tax Office (ATO) audit of the 2018 partial sale of the Retirement Living business, as a contingent liability in our 2024 Half Year Results.  

It’s important to note that the ATO audit is ongoing, and as such, it is not possible to determine at this time any impact for Lendlease. Therefore, media reporting of any financial impact is purely speculative. 

Tony Watson, who is quoted in the story, did not provide tax advice to Lendlease on the partial sale of our retirement living business.  A number of his statements will be considered in Federal Court legal proceedings. Therefore, it’s not appropriate for us to comment on these matters. However, we deny his allegations and are actively defending the proceedings. 

We’re confident our tax treatment is consistent with the law and with the ATO’s 2002 tax ruling on the retirement living industry.  We lodged our 2018 tax return on that basis and intend to vigorously defend our position, should the ATO not accept it. 

We’ve publicly outlined our position on this matter in 2021 and 2023. 

The contingent liability note mentioned by the story can be found on page 45 of our 2024 Half Year Consolidated Financial Report (copied below).  

The Group is subject to an ongoing Australian Tax Office (“ATO”) audit of the partial sale of its Retirement Living business in the 2018 year. The Group proactively contacted the ATO to review the tax treatment applied to the partial sale prior to submitting its 2018 tax return. It also obtained independent advice before filing its 2018 tax return.  

The Audit is progressing and during the current reporting period the ATO communicated that it intends to issue a statement of audit position before 30 June 2024. It is currently not possible to determine the impact of this audit, if any, on the Group, although the ATO may advance a final position that some additional tax is owed.  

The Group believes its tax treatment of the partial sale of the Retirement Living business is in accordance with the law and consistent with the ATO’s 2002 tax ruling on the taxation of the retirement living industry. The Group lodged its 2018 tax return on that basis and Lendlease intends to vigorously defend its position. If the position of the Group is not accepted by the ATO, the timing of resolution of any subsequent dispute cannot be determined.