TPG lumped with $23m in extra tax

Telecommunications giant TPG has been lumped with a $23 million tax bill following backdated changes to tax law impacting the company's 2010 acquisition of Pipe Networks.

In March 2010, TPG finalised its buy of Pipe Networks for $373 million, but it didn't complete the acquisition until July 2010, after the new Tax Laws Amendment Bill (No 2) 2012 — passed in parliament on 27 June 2012 — was set to start taking effect. The new law changed the way in which a company can deduct the costs allocated to some assets following an acquisition.

Thanks to the change, TPG has advised the market that it will now be hit with a one-off increased tax expense of $23 million for the 2012 financial year. This is to be met with an increase in tax payments in 2013-14 of $15 million, with the remaining $8 million to be paid over the following 6 years.

In a submission to parliament before the law was passed, TPG warned that this hit would be seen as very concerning to international investors, and would potentially result in TPG being excluded from some investors' considerations.

Despite this, TPG said that it is tracking well to results guidance that it provided earlier to the market, and will report full-year results on 18 September.