Endless Woes For Crown Resorts
Crown Resorts Limited has now taken to fighting the Australian government’s tax collections department on an AUD362 million (roughly US$270 million) tax bill, which it claims is 5% more than its profit made during 2017.
According to Crown Resorts, the Australian Taxation Office is literally robbing it of its livelihood and capacity to continue to trade.
Tax Equal To Profits
An Australian Court has conceded that the situation does seem to be extremely problematic, and a hearing to establish the merits of the arguments on both sides, has been scheduled for August the 31st of this year.
Crown has obviously launched its own investigation as to the origins of the sky-high tax assessment by the Taxation Authority, and it seems to stem from its 2007 purchase of the Vegas Casino operator, Cannery Casino Resorts. Back then, the price of the acquisition amounted to US$1.75 billion. Cannery Casino’s business endeavours included four casinos in Western Pennsylvania as well as Nevada.
It was really rotten luck on the part of Crown, as the acquisition was finalised just before the worldwide financial recession that peaked in 2008. Instead of seeing the profits that the company had hoped for, and would normally have seen as a result of an acquisition of this magnitude, it was forced to write off many of its assets as well as absorb a bunch of bad debt.
Not The First Time
Then, to add insult to injury, rolled around 2015, when Crown Resorts handed over more than AUD640 million to the Australian Tax Authority. The issue concerning the fact that this amount constituted almost two-thirds of its total profit margin before tax, was immediately raised. Not much luck was to be had in terms of any leniency or relief from government’s corner.
Besides for its massive tax problems, Crown Resorts just cannot seem to keep head above water. The last three years have been murky-water sailing, due to everything from tax issues to staff issues in China to allegations that the company had been tampering with slot machines in order to coax players into playing for longer, and at higher volatility.
Time seems to be ticking ever faster for Crown.