Tax office drops RCF asset freeze order

Major mining investment house Resource Capital Funds has had a freezing order on $42 million worth of its assets lifted after reaching agreement with the Australian Taxation Office just two days before it was due in court to argue its case.

While the agreement with the ATO, jointly announced by the two parties, does not necessarily mean their dispute has ended, it does signal that the tax man’s allegations that RCF was a flight risk were overstated.

Assets held by Cayman Islands-registered Resource Capital Fund III LP, including a $28 million stake in Murchison Metals, were frozen in early November on orders granted by the Federal Court after a secret hearing.

RCF, which has offices in Perth and Denver, claimed it has followed investment rules. Last week it stated that, despite the Cayman Islands registration, the fund’s investors were almost exclusively US-based, subject to American tax laws and, regarding Australian investments, the US-Australia Double Taxation Treaty.

“RCF is precisely the style and structure of private equity firm the ATO has since identified as conforming with its rules in the determination released just this week,” RCF US-based general counsel Brian Dolan said in a statement.