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CKI, Power Assets Ordered to Pay $711 Million in Taxes

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Sept. 5 (Bloomberg) -- Cheung Kong Infrastructure Holdings Ltd. and Power Assets Holdings Ltd., controlled by Asia’s richest man Li Ka-shing, must pay A$776 million ($711 million) in back taxes in Australia, a judge ruled.

Australia Federal Court Justice Michelle Gordon on Aug. 30 in Melbourne issued two orders without holding a trial at the request of Australia’s deputy commissioner of taxation after Cheung Kong Infrastructure and Power Assets failed to provide addresses where they could be served with the tax office’s lawsuit.

“Cheung Kong’s failure to take that step is continuing and occasioning unnecessary delay and prejudice to the commissioner,” Gordon wrote in her ruling. She said the same about Power Assets.

The two companies owe taxes from 2000 to 2009, according to complaints filed June 14. Cheung Kong Infrastructure and Power Assets are the primary electricity network owners in Victoria, holding a 51 percent stake in two distribution networks, according to the Australian power regulator. They also have a 200-year lease on South Australia’s distribution network.

Power Assets will continue to defend the case, said Mimi Yeung, a spokeswoman at the energy company.

‘One-Off Event’

“The overall dispute with the ATO is yet to be resolved,” Wendy Tong Barnes, a Cheung Kong Infrastructure spokeswoman, said in an e-mail, referring to the Australian Taxation Office. She said the company plans to challenge the tax office’s position.

Gordon ordered Cheung Kong Infrastructure to pay A$380 million in back taxes and Power Assets to pay A$396 million.

“This is just a one-off kind of event, and was most likely caused by a different reading of Australia’s tax laws,” said Simon Yeung, an analyst at Citic Securities International Co.

Cheung Kong Infrastructure fell 1.2 percent to HK$52.80 at the close in Hong Kong trading. Power Assets gained 1.9 percent to HK$68.90.

The cases are DCOT v Cheung Kong Infrastructure Holdings Ltd. VID515/2013 and DCOT v Power Assets Holdings Ltd. VID516/2013. Federal Court of Australia (Melbourne).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

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