FIVE years of uncertainty over a $368 million tax dispute ended favourably in the High Court yesterday for James Hardie Industries and the asbestos compensation trust it funds.
The court refused an application by the Tax Office for special leave to appeal a full Federal Court decision handed down in August.
James Hardie said yesterday that it expected to be reimbursed $311 million, comprising half the disputed amount, which it deposited with the Tax Office in 2007, plus interest. It also anticipates receiving some of its legal costs.
Its shares initially rose on the news, but later joined the fall on the broader market and closed almost 3 per cent lower at $7.22.
The Asbestos Injuries Compensation Fund, set up after a public furore over James Hardie's gross underfunding of a similar trust in 2001, stands to receive 35 per cent of the reimbursement, or about $109 million.
However, the injection will not come soon enough to prevent the fund calling on emergency funding made available by the NSW and federal governments last year.
A NSW government spokesman said yesterday the fund had issued a notice to draw down $29.7 million from the NSW loan facility and that the money would be transferred on February 17.
The loan does not reduce James Hardie's liability as the fund will draw on future contributions from the company to repay the government, with interest.
The timing of the fund's receipt of cash from yesterday's court ruling will depend on whether the Tax Office reimburses James Hardie before its March 31 balance date.
The NSW legislation governing the fund, introduced in 2007, provides for a transfer each July of 35 per cent of James Hardie's cash flow recorded in the year to the previous March. If the Tax Office pays James Hardie after March 31 this year, the fund will not receive its share until July next year.
The Asbestos Diseases Foundation of Australia yesterday called on the Tax Office to release the money immediately to ''avoid any more damaging uncertainty for victims of asbestos-related disease''.
A Tax Office spokesman said it was considering the implications of the High Court ruling.
The last published information showed the fund had cash of $74 million in September.
In the previous six months it paid $52 million in compensation, indicating that it would need to use the line of credit this year.
The NSW and federal governments established the emergency facility, of up to $320 million, after the fund was affected by a sharp fall in James Hardie's cash flow caused by the downturn in the US housing market, in turn caused by the 2008 credit crisis.
The tax dispute related to 1998 transactions involving three wholly owned subsidiaries of James Hardie in Australia, the US and Malta. The transactions were part of a wider restructure in which James Hardie moved its operational base from Australia to the US, its largest market.
