NSW to chase Cross City Tunnel tax bill

In a jam: the Cross City Tunnel is having trouble with its finances. Photo: Michele MossopThe NSW government has confirmed it will appeal a Supreme Court ruling revoking a $60 million stamp duty bill for Sydney’s Cross City Tunnel, making it more likely the tunnel will fall into receivership, the AFR writes on its website.
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Minister for Finance and Services Andrew Constance said the Chief Commissioner of State Revenue will appeal the court’s decision, made in early August.

“The Chief Commissioner of State Revenue has a responsibility to administer taxation law in NSW and collect all tax considered to be payable,” Mr Constance said. “The NSW government strongly believes that every business should pay its taxes.”

The Office of State Revenue has lodged an intention to appeal.

The tunnel’s owners – Royal Bank of Scotland, Leighton Holdings and the UK’s EISER Infrastructure Partners – were hit with the tax bill after acquiring the road out of receivership in 2007 for $695 million.

The Commissioner of State Revenue charged the new owners stamp duty on the transaction.

The tunnel’s owners have been trying to refinance some $79 million in debt due at the end of the month. The refinancing efforts have been hampered by the stamp duty court case.

Now that the government has confirmed its appeal and prolonged the issue, it seems unlikely the Cross City Tunnel will be able to refinance its debt by the September 30 deadline.

The tunnel first fell into receivership in 2006 due to poor traffic flows. Although traffic has since improved, it does not generate enough income to pay the stamp duty bill as well as refinance the tunnel’s debt.

Bankers say the tunnel could avoid paying the stamp duty by going into receivership before the appeal takes place because senior creditors would rank above the tax claim.

Cross City Tunnel said it remained in talks with banks with the aim of refinancing its debt by the end of the month.

The original release of this article first appeared on the website of Shanghai Night Net.

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