The former No.1 village operator, which has steadfastly stated it has acted within the law, disclosed in its HY25 financial report a payment to the Australian Tax Office (ATO) over the sale of 25% of its retirement living business to Dutch pension giant APG for $450 million in 2017.
Lendlease revealed it had handed over $44 million to the ATO as an upfront payment after being given a $112.1 million amended assessment in May last year. The amended assessment comprised:
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$62.4 million capital gains tax arising from the exit of the Retirement Living trust from the Lendlease tax consolidated group which was a one-off event that only applies to the 2018 transaction;
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$25.2 million additional tax from the sale of 25% of the units in the joint venture trust, and
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$24.5 million of shortfall interest.
“The amended assessment did not include any penalties and on 25 September 2024 the ATO confirmed it would not be imposing penalties in respect of the amended assessment for 2018. The ATO also subsequently reduced the shortfall interest from $24.5m to $7.4 million,” Lendlease said.
“The Group has formally objected to the amended assessment and has requested a review of the decision not to remit the remaining shortfall interest. The ATO is yet to advise Lendlease its decision on the objection to the 2018 amended assessment.
“On 9 August 2024, the Group made a payment of $44 million to the ATO, representing 50% of the shortfall tax currently under dispute to reduce exposure to further general interest accruing. This amount will be refundable if the Group is ultimately successful with the dispute.”
After the partial sale of the Retirement Living business to APG in 2018, Lendlease sold another two tranches of the business to Aware Super for almost $950 million.
“Based on the ATO’s position for the 2018 income year, additional tax of approximately $50 million could arise in relation to these subsequent sales. The Group has voluntarily disclosed this to the ATO, however the ATO are yet to issue amended assessments,” Lendlease stated, adding interest may add up to $8 million to the amended assessment.
CEO Tony Lombardo, who was Lendlease’s Chief Financial Officer from 2011 to 2016, said the company would continue defending the matter with the ATO.
Lendlease based the tax treatment of the retirement assets on advice from PwC Australia and against the views of the firm’s then chief tax adviser Greenwoods & Freehills partner Tony Watson.
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