Perth tax adviser facing $35m tax bill

Perth accountant Peter Moltoni has been hit with a $34.5 million tax assessment after the ATO took a close interest in disputed payments by his former client Pankaj Oswal.

The massive tax bill came to light in Supreme Court proceedings this week, where Mr Moltoni was seeking a stay of proceedings while he disputed the assessment.

Master Craig Sanderson rejected Mr Moltoni’s application, despite the financial hardship likely to ensue.

His ruling noted that Mr Moltoni had defaulted on a mortgage payment, and that will result in a forced sale of his property.

The ruling also noted that Mr Moltoni has been blocked from travelling overseas since March, even though much of his business is undertaken from London.

Mr Moltoni, who was represented by Sceales Lawyers, was the founder and a director at Subiaco-based tax advisory firm M Squared & Associates, which was established in 2007.

The tax dispute stemmed from events one year earlier, when he was with the (former) Crowe Horwath practice.

The key transaction was a $US21 million payment by Singapore-based Maruti Holdings Pte Ltd to the Luxembourg bank account of a British Virgin Islands entity, Sinclair Strategies Ltd.

The Australian Tax Office said this was assessable in the hands of Mr Moltoni, an Australian resident. 

The background to the dispute was laid out in a 2013 ruling by the Eastern Caribbean Supreme Court, in the Territory of the Virgin Islands.

In that case, Maruti Holdings took action against Sinclair Strategies, Mr Moltoni and Mick Cahill (the managing director of an entity called Intertrust Guernsey) to recover the $US21 million.

Maruti’s directors were Mr Oswal and Shashank Swan, though Mr Oswal told the Caribbean court that Maruti ultimately belonged to his wife Radhika.

Sinclair Projects claimed it was paid $US21 million in return for consultancy services in Western Australia to Oswal Projects.

In contrast, Maruti claimed the payment was a result of duress suffered by, and intimidation of, Mr Oswal.

It was alleged Messrs Moltoni and Cahill had threatened to tell the Oswal’s bank (ANZ Banking Group) about massive cost over-runs on their Burrup Fertilisers project, with the prospect ANZ would respond by taking control of their assets.

Maruti also claimed the consultancy agreement was a sham designed to provide a false justification for the payment.

“Maruti pleads that Sinclair was a mask used by Mr Cahill and Mr Moltoni to conceal their receipt of the $US21 million,” the Caribbean court judgement stated.

The Caribbean court dismissed Maruti’s claims.

In explaining the decision, the court noted that Mr Oswal continued to use Mr Moltoni’s services until 2011 and even invited him and his wife to a party in 2009, well after the disputed payment.

The court was also told Intertrust Guernsey continued to act for Mr Oswal until 2011.

This was shortly after the ANZ appointed receivers to the Oswal’s business, held through Burrup Holdings; this appointment was not connected with Messrs Moltoni or Cahill.