Treasury: Foreign takeovers under scrutiny

The fallout from PwC Australia’s misuse of confidential federal government tax information to gain commercial advantage continues to be felt, with the Treasury revealing it is looking into overseas takeovers involving the consultancy.

In response to questions from Labor senator Deborah O’Neill, the Treasury said it was “examining its records and working with the ATO to determine whether any overseas investment applications involving PwC were based on false or misleading information”.

The Sydney Morning Herald reported Bellamy’s takeover by China Mengniu Dairy Company in 2019 and JBS’s acquisition of Huon Aquaculture for $425 million in 2021.

Bellamy and Huon have been contacted for comment.

“Depending on the findings of these investigations, the Treasury Department will consider what further actions or responses may be appropriate to take,” the statement said.

The investigation was launched in response to questions raised by the ATO in May.

O’Neill was told there were concerns about information from the Foreign Investment and Review Board (FIRB) applicant and/or adviser PwC which “while likely to have been legally correct, was intended to mislead the ATO as to the FIRB applicant’s intended use of aggressive tax structures, which had an impact on the ATO’s advice to National Treasury”.

The ATO found that one particular FIRB application and its applicant had raised the issue with the then PwC CEO, Luke Sayers. The matter was the subject of multiple audits, revised assessments were issued and the matter was resolved.

The case led to reforms to the foreign investment application process, including the establishment of a dedicated ATO compliance team to monitor and review foreign investment transactions, and a role for advisers in tax structuring.

As of January 1, 2021, providing false or misleading information to the Treasurer may result in criminal prosecution, civil penalties, or a notice of violation. The Treasurer also has the power to revoke approval of a foreign investment based on false or misleading information or documents, which applies to decisions made before and after January 1, 2021.