Aussie John's tax backlash in court

AUSSIE Home Loans boss John Symond has the image of an average bloke and a champion of the people.

But when it comes to tax a court has heard he has received the sort of tax-break most Aussies can only dream of.

Symond used a tax-free $58 million windfall to build his harbourfront mansion, referred to by locals as "Westfield Point Piper".

The four-storey house was built with tax-free cash Symond received from his company between 2003 and 2006, the Supreme Court has heard.

Details of the tax-free windfall have emerged as part of a negligence lawsuit Mr Symond has taken against the law firm which advised him on his tax and company structure.

The court heard it wasn't until after the ATO audited Symond in February 2007, that Symond paid tax on the $58 million as part of a settlement of the tax dispute - in December 2007.

As part of the settlement he agreed to pay a $568,450 penalty and $5.7 million in back taxes.

Symond, who is worth an estimated $600 million, is suing his lawyers Gadens - and former partner Ross Seller - claiming the advice they gave him on June 19, 2003, that he could draw the $58 million without paying tax was negligent.

In its defence, Gadens claims Mr Symond was aware his senior finance executives and lawyers had arranged a restructure of Aussie Home Loans so he could "draw money from the new holding company tax-free".

The restructure was considered "risky" because there was a chance the ATO would prosecute him for tax avoidance.

Mr Symond argued he would never have agreed to the controversial financial structure if he had been told he was at risk of a tax audit.

In documents filed with the court, Mr Symond claimed he told his executives David Makinson and Rob Wannan: "I can't risk any problems with the ATO. The last thing I want is for the media or the public to think I'm some kind of tax cheat."

Justice Robert Beech-Jones is to hand down his decision later this year.

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Tinkler case back in court

A JUDGE will this week hear why troubled businessman Nathan Tinkler's lawyers think he should not have to answer questions from the liquidators of his Mulsanne Resources in court.

The former billionaire and his fellow directors were due to appear in the NSW Supreme Court on Friday to be examined over Mulsanne's failure to pay $28.4 million for buying a major stake in listed coal explorer Blackwood Corporation.

However, his barrister Alec Leopold SC told the court that he would be seeking a stay of the proceedings.

He said the same solicitor had acted on behalf of Mulsanne's liquidator Ferrier Hodgson, Blackwood and a major shareholder.

Mr Leopold also said the liquidator had met with Blackwood and the major shareholder.

The matter was listed for directions in the NSW Supreme Court on Monday.

Justice Paul Brereton adjourned the case for a hearing on Tuesday.

Blackwood sued Mulsanne Resources after Mr Tinkler's company agreed last July to buy a 33.85 per cent stake in it for $28.4 million.

But Mulsanne then failed to follow through with the deal.

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Hight Court told MRRT unconstitutional

Fortescue Metals Group will appear before the High Court to challenge the government's mining tax. Source: AAP

A LEGAL challenge against the federal government's mineral resources rent tax (MRRT) has started in the High Court with lawyers for miner Andrew "Twiggy" Forrest arguing the controversial impost breaches the constitution.

Mr Forrest wasn't present in court on Wednesday for the start of the case that pits his Fortescue Metals Group against the commonwealth.

Governments in the big mining states of Queensland and Western Australia have intervened in the hearing.

The full court of the High Court, sitting in Canberra, has set down three days to hear the case, which will involve complex legal argument.

At one point, Justice Kenneth Hayne observed: "Nothing is unduly simple in this."

Opening the case, counsel for Fortescue David Jackson QC said the company did not dispute the commonwealth's power to raise tax.

But in this case, the validity of the MRRT legislation was being challenged on grounds that it contravened a provision of the constitution which stipulates that tax must be applied equally to all states.

"It discriminates against the states in that it gives rise to a preference to some states," Mr Jackson said, arguing the MRRT was levied differently in each state because of the variation in mining royalties which are offset against tax liabilities.

The commonwealth will argue the tax is constitutional because it is imposed at a uniform rate regardless of a mine's location.

Royalties were merely one type of allowance for which a miner can calculate deductions in calculating MRRT liability.

The MRRT is levied at the rate of 22.5 per cent on total profits over $75 million derived from extraction of iron ore, coal and coal-seam gas.

Mr Forrest vigorously opposed the MRRT from the outset and foreshadowed a legal challenge last year.

That was long before the government revealed how little the MRRT actually raised in its first six months of operation.

To the end of December 2012, the tax garnered $126 million from miners against a full-year forecast of $2.0 billion.

Fortescue expects to pay no MRRT this year.

The case is being heard by six of the court's seven judges after Justice Stephen Gageler excused himself on the grounds he provided legal advice to the commonwealth on the MRRT while serving as solicitor-general.

The case is continuing.

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