Coles To Sue Tax Office For $40 Million Excise Tax Paid Upfront On Fuel That Later Evaporated

0
120

Amid of separation from Wesfarmers, Coles has been hit by $40 million fuel excise cost for the manufacturing of fuel that eventually ‘evaporated.’ Supermarket giant Coles claims that 107 million litres of fuel evaporated after they have paid $40 million upfront excise duty on the production of fuel.

Subsequently, the company claims that Australian Tax Office have to credit 100% of the fuel tax that they levied on lost product as the company has neither sold nor has been profited by the fuel produced that evaporated.

But tax authorities have rejected Coles request for adjustment of tax for 2014-2017. As a result, Wesfarmers’ supermarket unit Coles has decided to take the matter to court. The company believes that due to the upfront payment of excise duty they miss out a potential part of their earnings as many a times a considerable amount of petrol gets evaporated or leaked after they have spent millions of dollars on upfront tax payments.  

Therefore, the company seeks to get clarification from the court to know if they have overpaid fuel excise in the past, specifically in respect of the fuel volumes that have been evaporated or leaked.

During the first quarter of Fiscal 2019 the fuel volumes of Coles’ convenience store segment have been considerably reduced due to higher oil prices but driven by the significant growth in the overall food to-go offering, the sales revenue of Coles convenience store segment ‘Coles Express’ has gone up by 2.5% pcp to $1,437 million for three month ended 30 September 2018.

Moreover, the comparable sales growth of Coles has gone up 5.1% for September 2018 quarter underpinned by the success of company’s ‘Little Shop’ miniature campaigns, investments in flybuys program that promoted restricted the use of one-time plastic bags by giving reward points if they bring, they carry their own bag with them. Overall the company has shown significant momentum in sales where the revenue growth across Coles supermarket and Coles liquor has been utilized to offset lower growth from Coles convenience store segment.

Meanwhile, Coles demerger with Wesfarmers is expected to be completed by the end of this month. After this separation, Coles would become an independent public company trading on Australian Securities Exchange, however, parent Wesfarmers will retain 15% of stakes in Coles.

Coles holding company Wesfarmers Limited (ASX: WES) was trading at higher level on ASX today. Wesfarmers’ share price has gone up by 0.834% or $0.380 to close at $45.960 on 5 November 2018. The stock has seen a performance change of +7.65% over the past one year. While its PE multiple is 43.070 x with market capitalization of $51.68 billion as on 5 November 2018.


Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.

Leave a Reply