TAX NEWS - JUNE 2010

JPMorgan fund manger cuts Rio, BHP stake

JPMorgan Chase & Co fund manager Ian Henderson has sold off a quarter of his stake in mining giants BHP Billiton Ltd and Rio Tinto Ltd in the wake of the federal government's proposed resources super profit tax, according to a report on Bloomberg.com.

According to the report, Mr Henderson, a manager of $US7 billion ($A8.4 billion) in natural-resource assets, sold the stake on the concern the proposed tax will curb growth in the industry.

"It's been a wake-up call frankly," Mr Henderson told Bloomberg.com. "I had not thought that the changes in Australia would be quite as drastic as they are proposed to be."

Mr Henderson said the RSPT clearly reduced the attractions of developing new projects in Australia and investment in Australian-based mining ventures.

Elsewhere, a report in The Australian Financial Review questions the tax figures BHP claims it paid to the Australian government in the debate over the RSPT.

BHP insists it paid $6.3 billion in taxes last year including including income tax, petroleum resource rent tax and royalties.

The AFR reports that BHP's detailed financial statements show the miner in fact had an "Australian taxation expense" of $3.16 billion for the year.

The miner claims the $3.16 billion figure is an just an accounting measure, and the best measure of its taxes are recorded in its cash flow statement.