The move in the South Pacific French territory is disclosed in the latest financial accounts of Gladstone Pacific Nickel, which is controlled by the tycoon, who owns about 95 per cent of the shares. The accounts, lodged with the Australian Securities & Investments Commission last week, also show $2.5 million (US$1.7 million) has been transferred from Gladstone Pacific Nickel to Palmer’s flagship company, Mineralogy, which has been bleeding cash and is two years behind in filing its accounts with ASIC.
Palmer, his nephew Blair Brewster and close friend Domenic Martino agreed to pay themselves directors’ fees amounting to $360,000 (US$256,000). The company, which has two employees, held one meeting, which Palmer did not attend.
The tax dispute with the New Caledonian Tax Department started with an assessment notice seeking $1.6m (US$1.1 million) in income taxes over three consecutive years in which Palmer’s company said it had “accumulated tax losses of approximately $5.2m (US$3.7 million)”.
After the amount was appealed by Palmer’s company, the New Caledonia government slashed the amount sought to $112,000 (US$79,905) in March this year and asked for a bank guarantee for payment.
The accounts disclose that Palmer “contested the final amount owing” by litigating in New Caledonia’s courts in June, leading to the tax department there telling him last month that “due to the fact a bank guarantee was not given, recovery procedures would commence for the total amount owed”.
“The tax authority requested a bank guarantee for the amount owing, which has was not given by the company,’’ state Palmer’s company accounts.
It appears Palmer’s company still intends to refuse to pay the sum, as it says its assets in New Caledonia “consist of a nominal amount of cash on hand and a fully depreciated motor vehicle, with a nominal market value”. While the tax is unpaid, the accounts disclose that “professional fees” of $299,000 (US$213,317) have been spent by Palmer on costs associated with the tax audit as well as legal and consulting fees for “ongoing approvals” for the company.
“The directors believe that there are strong grounds supporting the arguments presented in the objection that was lodged with the New Caledonian Tax Department,’’ the accounts state.
Neither the Palmer United Party leader nor his spokesman, Andrew Crook, responded to questions from The Australian about the tax dispute, the $2.5m (US$1.7 million) transfer and the $360,000 (US$256,732) in directors’ fees.
New Caledonia was meant to provide nickel ore for an unbuilt refinery which, in its proposed form in the Queensland port city of Gladstone, would have seen capital investment of about $4 billion (US$2.8 billion), annual revenues of $3bn (US$2.1 billion) and hundreds of jobs.
The plan did not eventuate and a subsidiary company controlled by Palmer last month terminated land purchase agreements with the Queensland government for the refinery site.
The termination will produce a windfall as deposits totalling $1,684,491 (US$1,202,449) are refundable and will be repaid to Palmer’s company in September by the Labor government of Premier Annastacia Palaszczuk.
The $2.5m that Mineralogy received from Gladstone Pacific Nickel is described in the accounts as part of a “mining and royalty” agreement. But there have been no mining or royalties since the payment.
The payment occurred in early 2013 at a time when, according to Palmer’s former financial adviser Bill Schoch, the tycoon’s companies were close to insolvency. The nickel company was described as “currently non-revenue generating”, and warned that if additional funds were not raised “there is significant uncertainty that it may not be able to continue as a going concern”.
The Gladstone Pacific Nickel venture is separate from Palmer’s Townsville-based Queensland Nickel business, which has been struggling amid the slump in the nickel price and environmental problems including spills of toxic sludge.
Palmer has said that acquiring the refinery from BHP Billiton had provided him with “250 million of beer money a year”, but its losses are understood to be mounting due in part to the halving of the nickel price in the past year.
None of Palmer’s major businesses is profitable, nor do they provide royalties or positive cash flow. Palmer blames the Chinese government-owned conglomerate Citic for not paying him royalties on iron ore extracted from his tenements in Western Australia.
Palmer has in the past been critical of local companies that avoided paying tax.
“It’s a question about the morality of things ... and I think if those companies are working in Australia, employing Australians, they’ve got an obligation to care about their future and they should be paying tax here,” he said last November.
The tycoon is now suing Chinese executives for alleged “unconscionable conduct” for failing to make iron ore royalty payments which could have been used to upgrade the Townsville refinery’s old equipment.