ResMed continues to fight $258m tax bill, flagging legal action
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ResMed continues to fight $258m tax bill, flagging legal action

Medical device maker ResMed is willing to head to court to fight the Australian Taxation Office over a $US190.1 million ($257.9 million) tax bill relating to an ongoing transfer pricing dispute.

The possibility of legal action - if the two parties can not come to a settlement - was revealed on Friday as the company reported an 8 per cent fall in net profit to $US315.6 million for year to June 30.

Excluding one-off items such as restructuring expenses, writedowns and the impact of the US tax reforms on its income taxes, net profit lifted 27 per cent to $US507.8 million. ResMed saw its sales rise 13 per cent rise to $US2.3 billion during the year, and paid $US199.5 million in dividends.

Mick Farrell, CEO of ResMed.

Mick Farrell, CEO of ResMed.Credit:Luis Ascui

The San Diego-based and ASX-listed company, which has a market valuation of $20.5 billion, said in April it was under audit by the Tax Office and is disputing the tax assessment. ResMed's President Rob Douglas told Fairfax Media on Friday the dispute was ongoing.

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"ResMed does not agree with those assessments," he said. "We intend to pursue administrative and legal steps to defend our position, and we believe we’ll be deemed right at the end of the day."

ResMed manufactures masks to treat sleep disorders.

ResMed manufactures masks to treat sleep disorders.Credit:Rob Homer

Resmed makes masks and ventilation machines that are used by sufferers of sleep apnoea, a condition that causes people to stop breathing while they sleep. The condition is estimated to impact almost 1 billion people worldwide.

The company said sales were growing for its devices and masks, as well as the cloud-based software-as-a-service business it delivers under Brightree, which it acquired for $US800 million in 2016.

ResMed’s chief executive officer Mick Farrell said the company was well-positioned for fiscalyear 2019.

“We continue to innovate, we are improving our existing portfolio of products and offerings, and we have a robust pipeline to drive future growth,” he said. “Our clinical studies and research efforts are being recognised and the opportunity to increase awareness of sleep-related breathing disorders and improve patient quality of life is bigger than ever.”

ResMed received the ATO tax bill in March 2018. The Tax Office audit relates to the tax years 2009 through 2013, and the agency alleges the company owes $US151.7 million in additional income tax and $US38.4 million in accrued interest.

In April ResMed agreed to a pay $US75.9 million, 50 per cent of the assessed tax, with the remaining amounts due only if it was unsuccessful in defending its position.

In July, the ATO told Fairfax Media more than 30 large Australian corporates were disputing billions of dollars in tax bills raised under the federal government’s tougher laws aimed at curtailing multinational profit shifting.

Deputy Editor, BusinessDay. Reporting on tax and regulation.

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