Tuesday, June 09, 2015
Primary Health Care will reap up to $130 million in cash refunds from the Australian Taxation Office after the tax authority ruled that payments the company made for medical practices are tax deductible.
The $2.6 billion healthcare business founded by Ed Bateman said on Tuesday that it expects to receive a refund of approximately $18 million in the current year.
The group is now finalising applications for other deductions covering the 2010-2014 period worth up to $130 million.
"The significant majority of this [refund] this will be accounted for as a credit to income tax expense in FY [financial year] 2015," the company said.
Primary Health Care said that the implications of the ATO decision for the doctors and other health practitioners that work in its medical centres are unclear.
"Primary Health Care values the relationship that it has with all the healthcare practitioners working in its facilities and will work closely with them on this matter," the company said.
The proceeds from the cash tax refund, which could total up to $190 million if the tax office allows an 'out of time objection' covering earlier periods, will be used to pay down debt.
At the group's interim result in February, Primary Health Care said it had $1.13 billion in net debt but is well within its banking covenants and has significant headroom financially.
It secured a major debt refinancing in April to extend the term of its debt maturity profile and reduce interest costs.
The healthcare group said that demand for healthcare services continues to grow and it will expand its medical centre footprint to meet this demand, particularly its big multi-disciplinary clinics.
It also said that it intends to "adopt more flexible commercial arrangements with healthcare practitioners" to "enhance the attractiveness of its medical centre model and support its continued expansion".
afr.com
